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Welcome to the AQA AS
Economics Help Revision Guide

Tejvan R Pettinger
29 Campbell Road
[email protected]

You are welcome to leave feedback and ask further questions on Economics

It is not permissible to copy this guide for others. It is licensed for individual

Copyright © 2011…

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Unit 1
Markets and Market Failure

· Nature of Economics
· Economic Objectives
· Scarcity / Choice / Opportunity Cost
· Production Possibility Frontiers
· Positive / Normative Economics
· Specialisation and division of labour
· Production
· Supply
· Demand
· Types of Goods
· Market Equilibrium…

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Basic Economic Concepts
Fundamental Economic Problem
· The central theme in economics is the production of goods and
services to satisfy consumer needs. Generally, higher levels of
production enable a higher level of economic welfare.
· Economics is concerned with the issue of scarcity. In society,
resources are limited.…

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Production Possibility Frontiers (PPF)
A PPF shows the maximum output that an economy can produce if the
economy is maximising the use of its resources and operating efficiently.

Points on PPF Curve

· D = inefficient (Within PPF)
· A or B = Productively efficient. It is
impossible to…

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Economic Growth and PPF
Economic growth requires an increase in the productive capacity of the
economy. This could occur due to:
· Discovering more raw materials
· Increase in size of work force (e.g. immigration)
· Increase in capital stock (machines / factories)
· Increase in labour productivity (due…

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· The individual demand curve illustrates the price people are willing to pay
for a particular quantity of a good.
· A change in price causes a MOVEMENT ALONG the Demand Curve,
E.g. if there is an increase in price from p2 to p1 then there will be…

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This refers to the quantity of a good that the producer plans to sell in the
· As price increases firms have an incentive to supply more because
they get extra revenue (income) from selling the goods.

· If price changes, there is a movement along the…

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Market Equilibrium
The Price Mechanism refers to how supply and demand interacts to set the
market price and the amount of goods sold.
· If price were below the equilibrium at P2 then demand would be greater
than the supply. Therefore there is a shortage of (Q2 ­ Q1)…

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The Price Mechanism
Example: Factors that could explain a fall in the price
of a good
The price of a good, such as coffee, would fall if there was a fall in demand
and / or an increase in supply.





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Impact of New Supplier on Market
· A new supplier will cause supply to shift to the right and depress the
market price. This could lead to lower profitability and could cause
other firms to leave the market.
· However, if new firms enter when demand is increasing, the…



this is really useful thank you! :)

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