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Choice: A decision between one or more alternatives
Scarcity: When resources are limited (such as time)
Trade Off: When choosing one thing causes the loss
of another
Opportunity Cost: The loss of the next desirable
choice when choosing something
Price: Amount of money needed for a good or service
Revenue: Price x Quantity Sold
Demand: The quantity of a good or service someone
would like to buy at a price in a certain time
Price Insensitivity: When changing the price does
not lead to a big change in demand
Necessity: A good or service someone thinks is
Substitute: An alternative to a good or service…read more

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Key Definitions:
Price Sensitivity: Where changing the price leads to
a big change in demand
Stakeholders: Groups interested in the performance
of a business
Shareholders: The owners of a company
Competition Commission: The body which
investigates mergers and takeovers
Dividends: Payments made to stakeholders from
Third Party: A group or an individual that is directly
not involved in a decision or action
Externalities: The effects of an economic decision on
people who are directly not involved
Negative Externalities: Costs from business activity
which is paid by people outside of the business
Positive Externalities: The benefits received which is
experienced from people outside of the business…read more

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Profits: The reward of risk taking (Revenue ­
Production Cost)
Market Share: The amount a business sells
compared to other businesses selling similar things
Competitiveness: The strength a business has in a
market which is measured by the market share and
profitability. This shows if the user would buy from the
business or rivals
Competitive Advantage: Advantages a business has
over its rivals, this helps to gain customers
Social Success : The performance of a business in
the perspective of social, environmental and ethical
Marketing Mix: The combination of product, price,
place and promotion (4P'S)
Cash Flow: The money going in and out of a
business over a period of time. (Inflows and Outflows)
Consumer Confidence: An extent consumers will
pay money for a good or service…read more

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Inflation: An increase in the general prices, this is
measured by the consumer price index (CPI)
Cost of Living: A measure of the average cost of
necessities such as food, clothing and shelter
External Shock: A change in demand or inflation
caused by an issue out of the country e.g. oil prices
and a fall in the exchange rate
Internal Shock: A change in demand or inflation
caused by an issue within the country
Tax Revenue: Money received by the Government
from people paying taxes.
Exports: Good and services which are sold to other
countries, payments are given to the UK
Imports: Goods and services which are brought from
other countries, payments are given outside of the UK
Exchange Rate: The value of one currency in the
terms of another
Interest Rate: The cost of borrowing money and
returns received on saving…read more

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Economic Activity: The total amount of buying and
selling which takes place in an economy over time
Monetary Policy: The use of changes in the interest
rates to control inflation
Fiscal Policy: The use of taxation and Government
spending to achieve the Governments objectives
Internal Growth: When a business grows by selling
more goods or services
External Growth: When a business grows from
mergers or takeovers
Innovation: Turning an invention into a product which
customers will buy
Research and Development: Creating and designing
new products and new methods of production
Merger: When two or more firms agree to join
Takeover: When one business buys another
Conglomerate Merger: When two or more
businesses join with different interests…read more

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thank you great resources for revision

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