Economics Unit 1

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Needs and wants // Life cycle

Needs are things that we can live without:

  • Food
  • Water
  • House

Wants are things that we can live without:

  • TV
  • Internet
  • Holidays


  • Childhood (0-12)
  • Adolescence (12-18)
  • Young Adult
  • Middle Adult
  • Late Adult
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Opportunity costs // Product Price // Competition

Opportunity costs are things that we give up to do/ have something else


The supply and demand of a product can change the price


Competition is good for comsumers because it means:

  • Lower prices
  • Better quality
  • Faster updates
  • Gifts/Free items
  • Discounts
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Supply and demand graphs

A- Surplus: More supplied than demanded

B- Deficit: Less supplied than demanded

C-Equilibrium/ Selling price: Supply is the same as demand

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You can save in your wants

You might want to save for:

  • Special occasions (wedding)
  • Starting a family
  • Retirement
  • Education
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Saving Products


  • Tax free up to   15,000 a year, Long term savings
  • Low interest (1%), Limit on how much you can save

Instant Access:

  • Access to money at all times, Very flexible
  • Low interest (0.5%), Must visit bank to get money


  • High interest (2.3%)
  • NO access, There is a minimum amount (approx   1000)

Unit trusts:

  • Investing can lead to a profit, but could lose money

Shares: Unit trusts but with more risks

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AER // Interest

AER: Annual equivalent rate: Interest you get paid during the year

Gross Interest: Before tax is taken off

Net interest: After tax is taken off

Compound interest: Interest ontop of your current interest

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Borrowing // APR // Interest rates

You might want to borrow if:

  • You want to buy something big
  • You dont have enough money for needs


APR: Annual Percentage rate- interst rate including beneifts, compounding etc


Increase in Interest rates: Pay back more overall

Decrease in interest rates: Pay back less overall

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Borrowing Products


  • Medium amount (  7500), Medium Term (2-5 years)
  • Medium APR (6%)


  • Large amounts- for property, Long term (10+ years), Low APR, pay monthly
  • House can be taken away if you dont pay
  • Hire purchase: Mortgage for cars, sofas etc

Credit Card:

  • Used in store/online, Pay whenever
  • High APR, Credit Limit
  • Store Card: Credit Card for one shop (with benefits)


  • Attatched to current account, can spend more than you have, pay back monthly
  • High APR, Small amounts (Limit:  3000)
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Budget // Money Ethics // Uncertainty

Budget: A financial plan of all income and spendings

Benefits of budgeting: Keep track of spending so you dont spend too much and go into debt


Money ethics: Doing whats gight for the environment/ other people over profit


Uncertainty: issues that cause financial problems:

  • Family death
  • Accidents
  • Job Loss

These can be prevented by saving for emergencies

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