IGCSE Economics Flashcards

Economic Concepts

• Opportunity Cost: Represents the value of the next best alternative that is forfeited when making a choice.
• The Economic Problem: Highlights the fundamental issue of scarce resources versus unlimited wants.
• Economy: A system where goods and services are produced and exchanged by individuals and businesses.

Markets and Production

• Market: A venue where buyers and sellers engage in the exchange of goods and services.
• Perfect Market: A scenario where neither consumers nor producers can manipulate the market price of goods and services.
• Imperfect Market: Occurs when a single powerful consumer or producer can influence market prices.
• The Four Factors of Production: Includes Land, Capital, Labour, and Enterprise, each essential for producing goods and services.

Goods and Services

• Consumer Goods: Products that are purchased by individuals to satisfy personal wants and needs.
• Types of Consumer Goods: Distinct categories include durable goods (long-lasting) and non-durable goods (short-lived).
• Capital Goods: Man-made resources that facilitate the production of other goods and services.
• Public Goods: Goods provided by the government that are not typically produced by private firms due to lack of profitability.
• Merit Goods: Services provided by the government based on societal need, regardless of consumers' ability to pay.

Wealth Concepts

• Private Wealth: Refers to the assets owned by individuals or businesses in the private sector.
• Social Wealth: Encompasses goods and services owned by the government in the public sector.
• National Wealth: The total of both private and social wealth within a nation.

Income Types

• Earned Income: Money received from labor or work, such as wages and salaries.
• Unearned Income: Revenue generated from assets, requiring no active work, such as interest or dividends.

Resource Allocation

• Resource Allocation: The distribution of factors of production in the creation of specific goods and services.
• Economic System: Framework for addressing a country's fundamental economic questions: what to produce, how to produce, and for whom to produce.

Market Mechanisms

• Free Market System: An economic structure where producers and consumers dictate the production of goods.
• Price Mechanism: A tool utilized by entrepreneurs to determine production decisions based on consumer demand.

Production Metrics

• Average Product: Calculated as total product divided by the number of labor units used.
• Marginal Product: Represents the additional output obtained from increasing inputs, calculated as the change in total product divided by the change in labor.
• Fixed Costs: Expenses that remain constant regardless of output levels.
• Variable Costs: Costs that increase in proportion to the level of output produced.
• Total Costs: The sum of fixed and variable costs incurred in production.

Revenue and Profit

• Total Revenue: The overall income from sales, computed as price per unit multiplied by quantity sold.
• Average Revenue: Total revenue divided by the total output produced.
• Break-Even Point: The production level at which total costs equal total revenue, resulting in no net loss or gain.
• Optimum Point of Production: The production level where average costs are minimized.

Returns and Economic Principles

• Law of Diminishing Returns: Suggests that adding more factors of production will eventually yield lower additional output.
• Increasing Returns: Indicates a scenario where increasing production inputs results in a more than proportional increase in outputs.
• Increasing Returns to Scale: Describes a situation where doubling inputs leads to more than double the output.

This set of flashcards covers essential economic concepts relevant to the IGCSE Economics curriculum. Each card defines key terms such as opportunity cost, the economic problem, and market dynamics. Perfect for students looking to reinforce their understanding of economic principles.