GCSE Economics

Overview

For parents: OCR writes your child's Economics course and exams. OCR (Oxford Cambridge and RSA) is an English exam board popular for Computer Science and the Sciences, where it offers two different science routes.

Topics

Economics key terms

Original definitions for core course vocabulary, informed by the references below. Not an official or exhaustive board-specific glossary.

52 of 52 terms

Scarcity

The condition in which limited resources cannot satisfy all human wants.

Economic foundations

Opportunity cost

The value of the next-best alternative forgone when a choice is made.

Economic foundations

Factors of production

The resources used to produce goods and services: land, labour, capital and enterprise.

Economic foundations

Capital

Human-made resources used to produce other goods and services.

Economic foundations

Specialisation

Concentrating on a limited range of tasks or products to improve efficiency.

Economic foundations

Division of labour

Splitting production into separate tasks performed by different workers.

Economic foundations

Productivity

Output per unit of input over a specified period.

Economic foundations

Production possibility frontier

A boundary showing the maximum combinations of two outputs achievable with existing resources and technology.

Economic foundations

Economic efficiency

Using resources to achieve productive and allocative efficiency rather than wasting opportunities to increase welfare.

Economic foundations

Positive statement

A claim about what is or may happen that can, in principle, be tested against evidence.

Economic foundations

Normative statement

A judgement about what ought to happen, based partly on values.

Economic foundations

Mixed economy

An economy in which both markets and government influence resource allocation.

Economic foundations

Demand

The quantity consumers are willing and able to buy at different prices over a stated period.

Markets and intervention

Supply

The quantity producers are willing and able to sell at different prices over a stated period.

Markets and intervention

Market equilibrium

A price and quantity at which quantity demanded equals quantity supplied.

Markets and intervention

Excess demand

A situation in which quantity demanded exceeds quantity supplied at the prevailing price.

Markets and intervention

Substitute goods

Goods that can be used in place of one another to satisfy a similar want.

Markets and intervention

Complementary goods

Goods commonly used together, so demand for one is linked to demand for the other.

Markets and intervention

Market failure

A situation in which market allocation produces an inefficient use of resources.

Markets and intervention

Externality

A cost or benefit of an activity affecting third parties that is not reflected fully in market prices.

Markets and intervention

Public good

A good that is non-rival in consumption and non-excludable.

Markets and intervention

Indirect tax

A tax on expenditure on goods or services, often collected through sellers.

Markets and intervention

Subsidy

A government payment that supports production or consumption, usually reducing producers' costs or buyers' prices.

Markets and intervention

Information asymmetry

A situation in which one party to a transaction has more relevant information than another.

Markets and intervention

Gross domestic product

The value of final goods and services produced within an economy during a given period.

National and international economy

Real GDP

GDP adjusted for changes in the price level.

National and international economy

Economic growth

An increase in real output over time, commonly measured by growth in real GDP.

National and international economy

Inflation

A sustained increase in an economy's general price level.

National and international economy

Unemployment

The situation of people without work who are available for work and actively seeking it.

National and international economy

Aggregate demand

Total planned spending on domestically produced goods and services at each price level.

National and international economy

Aggregate supply

Total output firms are willing and able to produce at each price level.

National and international economy

Fiscal policy

Government decisions about taxation, spending and borrowing used to influence the economy.

National and international economy

Monetary policy

Changes to interest rates, money or credit conditions to pursue macroeconomic objectives.

National and international economy

Exchange rate

The price of one currency expressed in another currency.

National and international economy

Current account

The balance-of-payments account recording trade in goods and services, primary income and secondary income.

National and international economy

Comparative advantage

The ability to produce a good at a lower opportunity cost than another producer.

National and international economy

Price elasticity of demand

The percentage change in quantity demanded divided by the percentage change in its own price.

A Level extensions

Price elasticity of supply

The percentage change in quantity supplied divided by the percentage change in its own price.

A Level extensions

Income elasticity of demand

The percentage change in quantity demanded divided by the percentage change in consumer income.

A Level extensions

Cross elasticity of demand

The percentage change in demand for one good divided by the percentage change in another good's price.

A Level extensions

Perfect competition

A market structure with many price-taking firms, homogeneous products, free entry and exit, and perfect information.

A Level extensions

Monopolistic competition

A market structure with many firms selling differentiated products and relatively low barriers to entry.

A Level extensions

Oligopoly

A market structure dominated by a few interdependent firms whose decisions affect one another.

A Level extensions

Monopoly

A market structure with a single supplier; UK competition analysis also considers firms with substantial market power.

A Level extensions

Multiplier

The ratio of the eventual change in national income to the initial change in autonomous spending.

A Level extensions

Marginal cost

The extra total cost incurred by producing one additional unit of output.

A Level extensions

Marginal revenue

The extra total revenue obtained from selling one additional unit of output.

A Level extensions

Marginal utility

The additional satisfaction a consumer gains from consuming one more unit of a good.

A Level extensions

Marginal propensity to consume

The proportion of an additional unit of disposable income that households spend on consumption.

A Level extensions

Allocative efficiency

An allocation in which marginal social benefit equals marginal social cost, maximising net social benefit.

A Level extensions

Productive efficiency

Producing output at the lowest attainable average cost, without wasting inputs.

A Level extensions

Normal profit

The minimum return needed to keep an entrepreneur's resources in their current use, included in economic costs.

A Level extensions

Exams

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Revision

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Practice

• ✓ Key terms you tap to reveal
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Resources

Short, focused tasks for the Economics topics you find hardest — learn the key idea, check yourself, then try a marked exam-style question.