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Economics
AS Notes 20112012








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Contents
UNIT 1 COMPETITIVE MARKETS
UNIT 1.3.1 WHAT IS THE NATURE OF ECONOMICS?
THE BASIC ECONOMIC PROBLEM
OPPORTUNITY COST
FACTORS OF PRODUCTION
PRODUCTION POSSIBILITY FRONTIERS
SPECIALISATION
ECONOMIC STRUCTURES
NORMATIVE, OR POSITIVE?

UNIT 1.3.2 ­ WHAT DETERMINES THE DEMAND FOR A GOOD OR SERVICE IN A MARKET?
MARKETS
DEMAND
REVENUE
PRICE,…

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Unit 1 Competitive Markets
How they work and why they fail.


This unit provides an introduction to the nature of
economics and examines how the price mechanism
allocates resources in markets. It analyses the nature of
market failure, its causes and possible policy remedies. At
the end of this unit,…

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Unit 1.3.1 What is the nature of economics?

The Basic Economic Problem
The basic economic problem is that we have infinite wants and
scarce resources therefore choices have to be made.

Opportunity Cost
Because of the basic economic problem, governments, firms and
consumers must make choices as to what we…

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Production Possibility Frontiers
A country can choose to produce Guns and Butter.








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When producing a PPF always remember to:
Draw lines with arrows on the end.
Label the axis with accordance to the information given in
the case study.
Draw the PPF (must be straight if the opportunity cost is
constant.
Make sure it has a zero.
Label the levels of output…

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Economic Structures






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Normative, or Positive?

A normative statement is one that can be judged, or is an
opinion. This means that it is not a fact, nor can be proven.
An example is:

"The world would be a better place if the moon
was made of green cheese."

This is a normative…

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Unit 1.3.2 ­ What determines the demand for a good or
service in a market?

Markets
A market is a place where buyers and sellers come together to exchange goods
and services.
For example: Internet shopping, telesales, fruit and veg stalls, supermarkets or
the hairdressers.


Sellers Firms Suppliers

Consumers Households…

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