Economics — Cambridge IGCSE

Calculation of PED using the formula

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The difference between economic goods and free goods

Topic: The Basic Economic Problem – Economic Goods and Free Goods

Link between individual supply and market supply

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Implications of PED for decision-making by consumers, workers, producers/firms and government

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How these reasons influence the wages of workers, depending on discrimination between workers, e.g. male/female

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Diagrams that illustrate shifts of a supply curve

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Causes of inflation: demand-pull

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Drawing and interpretation of equilibrium using demand and supply curves

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Private sector/public sector firms

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Advantages and disadvantages of real GDP per head and HDI as indicators

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Advantages of the market economic system

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Reasons for current account deficits and surpluses

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The concept of an optimum population

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Reasons for trade restrictions: raise tax revenue

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Definitions of floating exchange rate, appreciation and depreciation

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Definition of PED

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Supply-side policy measures: education and training

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Causes of foreign exchange rate fluctuations: changes in demand for exports and imports

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Causes of changes in globalisation: changes in transport costs

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Interpretation of the significance of the PED value: perfectly inelastic, inelastic, unitary, elastic, perfectly elastic

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Reasons for trade restrictions: protect declining (sunset) industries

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Influences on households' spending, saving and borrowing: confidence

Microeconomic Decision‑makers: Households

Drawing and interpretation of average total cost (ATC) diagrams to illustrate economies and diseconomies of scale

Microeconomic Decision‑Makers – Firms

Measurement of economic growth: real Gross Domestic Product (GDP)

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Definitions of terms associated with market failure: public goods, merit goods, demerit goods, private benefits, external benefits, social benefits, private costs, external costs, social costs, monopoly

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Causes and consequences of shifts of a PPC in terms of an economy's growth

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How price changes are caused by changes in demand and supply

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Influences of the demand for labour and the supply of labour on wage determination

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The significance of the location of different production points

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Definitions of government budget

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Fiscal policy measures: changes in taxes

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Effects of changes in globalisation on income distribution

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Influences on households' spending, saving and borrowing: culture

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Advantages and disadvantages of economic growth

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Effects of changes in foreign exchange rates on prices and demand for exports and imports

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Effects of changes in globalisation on economic development

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Reasons behind the choice of aims and the criteria that governments may set for meeting each aim

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Effect of price changes on the amount spent by consumers and revenue raised by firms, shown both in a diagram and as a calculation

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The difference between production and productivity

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Components of the current account of the balance of payments: trade in goods

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Reasons for trade restrictions: avoid dumping

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Supply-side policy measures: deregulation

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Influences on the demand for factors of production: demand for the product, the price of different factors of production, their availability and their productivity

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Supply-side policy measures: labour market reforms

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Reasons for taxation: raising revenue, discouraging consumption of demerit goods, reducing imports, redistributing income, influencing total demand, encouraging environmental sustainability

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Supply-side policy measures: lower direct taxes

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Examples of the different classifications of tax: progressive, regressive, proportional; direct, indirect

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Definition of division of labour (worker specialisation)

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Implications of misallocation of resources in relation to the over-consumption of demerit goods and goods with external costs

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Primary/secondary/tertiary sector firms

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Reasons for differences in wages: government policy

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Implications of misallocation of resources in relation to the non-provision of public goods

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Drawing and interpretation of supply curve diagrams to show different PES

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How these reasons influence the wages of workers, depending on level of skills of workers

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The macroeconomic aims of government: redistribution of income

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Difference between absolute poverty and relative poverty

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Possible conflicts between macroeconomic aims: full employment and balance of payments stability

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Diagrams that illustrate movements along a supply curve

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Advantages and disadvantages of specialisation

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Definitions, advantages and disadvantages of nationalisation

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Causes of changes in globalisation: changes in trade restrictions

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Effects of changes in globalisation on competition

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Definition of specialisation by country

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Characteristics, advantages and disadvantages of monopoly markets

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Influences on production and productivity

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The three basic economic questions which determine resource allocation: who to produce for

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Definition of a market

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Drawing and interpretation of diagrams that show how changes in output affect costs of production

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Reasons for buying and selling foreign currencies: workers' remittances

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Advantages and disadvantages of division of labour

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The demand for and supply of a currency

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Shortages (demand exceeding supply) and surpluses (supply exceeding demand)

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Causes of poverty: age

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The macroeconomic aims of government: economic growth

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Reasons for differences in wages: demand for and supply of labour

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Consequences of recession for consumers, workers, producers/firms and the government

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How these reasons influence the wages of workers, depending on whether the worker is working in the private sector or public sector

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Calculations of the size of a government budget deficit/surplus

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The range of policies available to promote economic growth and their effectiveness

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Differences in size of primary, secondary and tertiary sectors

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Definition of fiscal policy

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Components of the current account of the balance of payments: primary income

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How monetary policy measures may enable a government to achieve its macroeconomic aims

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Definition of foreign exchange rate

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Causes/types of unemployment: frictional unemployment

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Causes of poverty: illness

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Causes of market failure relating to public goods, merit goods, demerit goods, external costs and external benefits, abuse of monopoly power

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The macroeconomic aims of government: stable prices/low inflation

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The significance of movements along a PPC and opportunity cost

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Definition of the basic economic problem

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Drawing and interpretation of the PPC diagram

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Use of demand and supply diagrams to illustrate the impact of changes in market conditions

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The effects of increases and decreases in population size and changes in the age and gender distribution of population

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Effect of having a high number of firms on price, quality, choice, profit

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Examples of the basic economic problem in the context of workers

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Differences in saving and investment

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Implications of misallocation of resources in relation to restricted supply causing higher prices under a monopoly

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Differences in productivity

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Definitions of government budget surplus

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Policies to alleviate poverty and redistribute income: more generous state benefits

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Causes of extensions and contractions in supply

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Causes of changes in globalisation: changes in communication costs

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Disadvantages of the market economic system

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Forms, functions and characteristics of money

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Components of the current account of the balance of payments: trade in services

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Policies to alleviate poverty and redistribute income: promoting economic growth

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Interpretation of the significance of the PES value: perfectly inelastic, inelastic, unitary, elastic, perfectly elastic

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Drawing and interpretation of the supply diagram

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Definitions of factors of production: land, labour, capital and enterprise

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Interpretation of disequilibrium using demand and supply schedules

Allocation of Resources – Price Determination

Effects of changes in globalisation on international trade

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Diagrams that illustrate movements along a demand curve

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Reasons for differences in living standards and income distribution within and between countries

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Role and importance of commercial banks

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Definition of the mixed economic system

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Effects of changes in investment on productivity

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Influences on households' spending, saving and borrowing: age

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Reasons for buying and selling foreign currencies: investment in capital goods between countries

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The determination of the equilibrium foreign exchange rate

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Reasons for trade restrictions: promote environmental sustainability

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Examples of markets

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Monetary policy measures: changes in money supply

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Differences in income

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Definitions, drawing and interpretation of diagrams, advantages and disadvantages of maximum and minimum prices in product markets

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How fiscal policy measures may enable a government to achieve its macroeconomic aims

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Impact of taxation on consumers, workers, producers/firms, the government and the economy

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Definitions, advantages and disadvantages of direct provision of goods and services

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Main influences on whether demand is elastic or inelastic

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The influence of sales on revenue

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Definition of production possibility curves (PPC)

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Policies to alleviate poverty and redistribute income: improved education

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Types of trade restrictions / methods of protection: import quotas

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Definitions, advantages and disadvantages of privatisation

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Impact on GDP, employment, inflation and foreign exchange rate

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Reasons for trade restrictions: protect strategic industries

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Monetary policy measures: changes in foreign exchange rate

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Causes of foreign exchange rate fluctuations: speculation

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Causes of decreases and increases in supply

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Causes/types of unemployment: seasonal unemployment

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Reasons for buying and selling foreign currencies: government intervention in currency markets

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Consequences of inflation for consumers, workers, producers/firms and the economy

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Definitions of net migration, immigration and emigration

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Definition of economic growth

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Types of trade restrictions / methods of protection: tariffs

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Drawing and interpretation of diagrams that illustrate the effects of changes in demand and supply in the labour market

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Policies to alleviate poverty and redistribute income: national minimum wage (NMW)

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Drawing and interpretation of disequilibrium using demand and supply curves

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How inflation affects savers, lenders and borrowers

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Fiscal policy measures: changes in government spending

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Components of the current account of the balance of payments: secondary income

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Indicators of living standards: real Gross Domestic Product (GDP) per head

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Effect of having only one firm on price, quality, choice, profit

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Reasons for trade restrictions: reduce a deficit on the current account of the balance of payments

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Definition of market equilibrium

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Effect of price changes on sales

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Drawing and interpretation of demand curve diagrams to show different PED

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Causes/types of unemployment: structural unemployment

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Relationship between PED and the amount spent by consumers and revenue raised by firms

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Definition of supply-side policy

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Reasons for adopting labour-intensive and capital-intensive production

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Causes of poverty: unemployment

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Definitions of total revenue (TR) and average revenue (AR)

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How internal and external economies and diseconomies of scale can affect a firm/industry as the scale of production changes

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Causes of inflation: cost-push

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Effects of changes in globalisation on migration

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Government policy, including national minimum wage (NMW) on wage determination

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Definition of market failure

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Types of trade restrictions / methods of protection: embargoes

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Examples of the basic economic problem in the context of governments

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Policies to alleviate poverty and redistribute income: progressive taxation

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How the price mechanism provides answers to the basic resource allocation decisions of what, how and for whom to produce

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Definition of supply

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Examples of opportunity cost in different contexts

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Roles of buyers and sellers

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Supply-side policy measures: improving incentives to work and invest

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Calculation of PES using the formula

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Definitions of government budget deficit

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The basis for specialisation by country in terms of the best resource allocation and/or low-cost production

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Possible conflicts between macroeconomic aims: economic growth and environmental sustainability

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Causes of changes in the quantity and quality of factors of production

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Advantages and disadvantages of labour-intensive and capital-intensive production

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Definitions of costs of production: total cost (TC), average total cost (ATC), fixed cost (FC), average fixed cost (AFC), variable cost (VC), average variable cost (AVC)

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MNCs and their advantages and disadvantages to host countries and home countries

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Diagrams that illustrate shifts of a demand curve

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Calculation of TC, ATC, FC, AFC, VC and AVC

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Definition of recession

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Reasons for differences in wages: discrimination, e.g. male/female

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Advantages and disadvantages of small and large firms

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Characteristics, advantages and disadvantages of competitive markets

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Factors affecting an individual's choice of occupation: wage and non-wage factors

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The range of policies available to control inflation and their effectiveness

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Reasons for buying and selling foreign currencies: trade in goods and services

International Trade and Globalisation – Foreign Exchange Rates

How these reasons influence the wages of workers, depending on economic sector workers operate in: primary/secondary/tertiary

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Main influences on whether supply is elastic or inelastic

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Definition of globalisation

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Reasons for buying and selling foreign currencies: payment of profit, interest and dividends between countries

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Examples of the basic economic problem in the context of producers/firms

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The three basic economic questions which determine resource allocation: what to produce

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Differences in education

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Causes of poverty: environmental factors

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How a recession may be caused by a decrease in total demand, a decrease in the quantity of resources or a decrease in the quality of resources

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How birth rates, death rates and net migration can vary between countries

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Influences on households' spending, saving and borrowing: rate of interest

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How economic growth may be caused by an increase in total demand, an increase in the quantity of resources or an increase in the quality of resources

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Decisions made by consumers, workers, producers/firms and governments when allocating their resources

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The macroeconomic aims of government: balance of payments stability

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Definitions, examples, advantages and disadvantages of different types of mergers: horizontal, vertical and conglomerate

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Measurement of inflation using the Consumer Prices Index (CPI)

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Drawing and interpretation of diagrams illustrating national minimum wages

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Interpretation of equilibrium using demand and supply schedules

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Definitions of birth rate

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Differences in natural resources

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Reasons why birth rates, death rates and net migration rates can vary between countries

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Influences on households' spending, saving and borrowing: income

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Definition of free trade

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How supply-side policy measures may enable a government to achieve its macroeconomic aims

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The concept of scarcity

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Definitions of employment, unemployment and full employment

Government and the Macro‑economy

Disadvantages of the mixed economic system

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Advantages of the mixed economic system

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Link between individual demand and market demand

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Effects of changes in globalisation on the environment

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Reasons for buying and selling foreign currencies: speculation

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Differences in population growth

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Definition of opportunity cost

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Trade unions and their relative bargaining power on wage determination

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Definition of market disequilibrium

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Causes/types of unemployment: cyclical unemployment

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Possible conflicts between macroeconomic aims: full employment and stable prices

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Definition of the market economic system

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Implications of misallocation of resources in relation to the under-consumption of merit goods and goods with external benefits

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How unemployment is measured (labour force survey)

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Definitions, advantages and disadvantages of quotas, e.g. for the extraction of natural resources

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Causes of changes in globalisation: movement of multinational companies (MNCs)

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Rewards to factors of production: rent, wages, interest and profit

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Reasons for differences in wages: relative bargaining strengths

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Drawing and interpretation of the demand diagram

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Definitions of death rate

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Causes of poverty: low wages

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Advantages and disadvantages of restricting free trade

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Definitions, advantages and disadvantages of regulation

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Consequences of unemployment for the individual, producers/firms, the government and the economy

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The range of policies available to reduce unemployment and their effectiveness

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Definition of PES

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Causes of extensions and contractions in demand

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Causes of foreign exchange rate fluctuations: changes in the interest rate

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Definitions, drawing and interpretation of diagrams, advantages and disadvantages of subsidies

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Definitions of inflation and deflation

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Supply-side policy measures: infrastructure spending

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Calculation of TR and AR

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Types of trade restrictions / methods of protection: subsidies

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Impact of trade restrictions on the home country and its trading partners

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The macroeconomic aims of government: full employment/low unemployment

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Role and importance of central banks

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Objectives of firms: survival, social welfare, profit maximisation and growth

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The range of policies available to achieve balance of payments stability and their effectiveness

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Reasons for trade restrictions: protect infant (sunrise) industries

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Formula for the unemployment rate

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The three basic economic questions which determine resource allocation: how to produce

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Causes of changes in the occupational and geographical mobility of labour

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Differences in healthcare

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Advantages and disadvantages of free trade

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Definitions of money supply and monetary policy

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Consequences of changes in the occupational and geographical mobility of labour

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Causes of decreases and increases in demand

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Reasons for trade restrictions: restrict the import of demerit goods

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The macroeconomic aims of government: environmental sustainability

Government Macro‑economic Intervention: Environmental Sustainability

Examples of the basic economic problem in the context of consumers

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Main areas of government spending and the reasons for and effects of spending in these areas

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Definitions, drawing and interpretation of diagrams, advantages and disadvantages of indirect taxation

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Indicators of living standards: Human Development Index (HDI) and its components

Economic Development – Living Standards

Definition of demand

The Allocation of Resources – Demand

Monetary policy measures: changes in interest rate

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Calculation of deficits and surpluses on the current account of the balance of payments and its component sections

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Supply-side policy measures: privatisation

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Policies to alleviate poverty and redistribute income: improved healthcare provision

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