OCR AS Economics - Markets in Action

OCR  AS Economics - Markets in Action: it includes market failure and diagrams, with abit of exam technique, I hope this helps! If there's any questions, corrections or anything like that, just shout :-) **

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  • Created by: Nahedaaa
  • Created on: 03-01-13 21:31
Preview of OCR AS Economics - Markets in Action

First 127 words of the document:

Economic problem scarce resources compared to the infinite want
Opportunity cost the cost of the next best alternative forgone, when a choice is made
Factors of production (FOP's)
Capital ­ man made aid to production e.g. railway
Entrepreneur ­ manages resources e.g. Sir Richard Branson
Land ­ natural resources e.g. Land
Labour- human capital e.g. Teacher
Maximum amount of goods or services that can be produced using existing resources
Why/how would the PPC/PPF shift?
Outwards due to an increase in any of the FOP's e.g. increase in technology, land or labour
Inwards a decrease in the FOP's e.g. decrease in labour, land or technology

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Specialisation concentration of workers/firm/region on a narrow range of goods and services
Increases productivity Demand for other goods/service decreases
Decrease in cost of production Natural disasters may ruin production
Quality of good/service increases
Division of Labour
Increases productivity Staff are not motivated
1 skill is perfect Lack of flexibility
Increase in quality R.S.…read more

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What affects demand?
Taste and fashion
over time it's constantly changing, if something is fashionable it will be high in demand. Taste is more
personal, for example, vegetarians won't buy beef
Price of substitutes/complements
if the price of a substitute increases then the demand for the good will increase, because the other
substitute prices are no longer competitive.…read more

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Contraction and extension still works the same way as it
does with demand
*memory aid that supply goes up is that supply is to the
sky, to S's for both
What affects Supply? (COGS)
Cost of Production
the supply would increase if a company had to pay more for labour or for certain natural resources.…read more

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PED ­ Price Elasticity of Demand
Percentage change in Quantity Demand % QD
Percentage change in Price % P
Less than 1 means inelastic Greater than 1 elastic Unitary is 1
What affects PED?
Proportion of income
Availability of substitutes
YED ­ Income Elasticity of Demand
Percentage change in Quantity demanded % QD
Percentage change in Income % Y
+ = Normal good **memory aid ­ being normal is positive
Normal good increase in income leads to an increase in demand
-…read more

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PES - Price Elasticity of Supply
Less than 1 means income inelastic Greater than 1 income elastic 1 is Unitary
PES elastic then small change in ££ will have a big effect on the quantity supplied
Determinants of PES:
Availability of FOP's
Availability id sticks of the product
Business relevance of elasticity
Remember that data is only estimates and inaccuracies may occur
Over time there might be other factors added to the estimate that haven't been thought of
Externality those not directly involved in…read more

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Information failure
Asymmetric information info not shared equally between 2 parties
Why does this happen? Not enough info, not up to date, not accurate
Merit goods under produced and under consumed e.g. Libraries
Demerit goods overproduced and over consumed e.g.…read more

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Regulation any legally enforced standard made by the government of a country
Efficiency Hard to measure
£££ for the government
Company afford fine…read more


Juliana Nyarko

Your revision notes are just amazng particularly National and International economy notes was just a life saver .

Thank you


This is a clear and concise set of revision notes on supply and demand theory. I would encourage students to use them interactively eg make your own abridged version, produce posters, revision cards etc.


This is amazing, thank you

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