Edexcel AS/A Level Economics (Edexcel AS/A Level Economics 2015)

Name: Edexcel AS/A Level Economics (Edexcel AS/A Level Economics 2015)
Brand: Pearson Education Limited
Price: 30.05 EUR
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Alain Anderton Dave Gray(Author)

Pearson Education Limited (Publisher)

1st Edition

Published on 27. June 2016

576 pages

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978-0-435-18347-9 (ISBN)

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Cover
Contents
How to use this book
Introduction AS/A level Economics
Acknowledgements
Theme 1: Introduction to markets and market failure
Chapter 1: Economics as a social science
The scientific method
Economics - the science
Theories and models
The purpose of modelling
Simplification
Assumptions and ceteris paribus
Positive and normative economics
Thinking like an economist: The Scottish Independence vote
Data Response Question: Net migration
Chapter 2: Economic data
The collection and reliability of data
Real and nominal values
Indices
The interpretation of data
Thinking like an economist: Spending on tourism
Data Response Question: Cinema data
Chapter 3: The economic problem
Scarcity
Infinite wants
The basic economic problem
What is an economy?
Economic resources
Thinking like an economist: The opportunity costs of going to university
Data Response Question: The National Health Service faces tough choices
Chapter 4: Production possibility frontiers
The problem of scarcity
Opportunity cost
Economic growth or decline
Consumption vs investment
Efficiency
Choice
Thinking like an economist: Water shortages
Data Response Question
Civil war in Syria
China
Replacing Trident
Chapter 5: Specialisation and the division of labour
Specialisation
Sectors of the economy
Markets
Money and exchange
The functions of money
Forms of money in a modern economy
Thinking like an economist: Slave labour and the supply chain
Data Response Question: Antler
Chapter 6: Types of economy
Economic systems
The allocation of resources
Types of economy
An evaluation of different types of economy
Smith, Hayek and Marx
Thinking like an economist: Mixed economies
Data Response Question: The US economy
Chapter 7: Rational decision making
Rational economic decision making
Maximisation
The margin
Thinking like an economist: Ryanair
Data Response Question: Private vs state schools
Chapter 8: Demand
Demand
Demand and price
Conditions of demand
Demand and income
The price of other goods
Other factors
The law of diminishing marginal utility
Consumer surplus
Thinking like an economist: The demand for housing
Data Response Question: Booming demand leads to higher milk prices
Chapter 9: Price elasticity of demand
The meaning of demand elasticity
Price elasticity of demand
Alternative formulae
Elastic and inelastic demand
Graphical representations
Two technical points
The determinants of price elasticity of demand
Price elasticity of demand and total revenue/expenditure
Thinking like an economist
The demand for housing
Price elasticity of demand for oil
Short-term and long-term price elasticities
Data Response Question: Fatty food clampdown
Chapter 10: Income and cross elasticities
Income elasticity of demand
Normal and inferior goods
Inferior goods and income elasticity
Necessities and luxuries
Cross elasticity of demand
Substitutes and complements
Thinking like an economist: Food substitutes
Data Response Question: Clothing, footwear and transport
Chapter 11: Supply
Supply
Supply and price
Conditions of supply
Costs of production
Technology
The prices of other goods
Other factors
Producer surplus
Price elasticity of supply
Determinants of elasticity of supply
The short run and the long run
Thinking like an economist
The supply of new housing
Factors affecting the supply of new private housing
Data Response Question: Salmon prices on the rise
Chapter 12: Price determination
Equilibrium price
Changes in demand and supply
Do markets clear?
Consumer and producer surplus
Points to note
Thinking like an economist: The price of gas
Data Response Question: Cocoa bean prices
Chapter 13: The price mechanism
The price mechanism
The rationing function
The signalling function
Incentive
Thinking like an economist: Motor cars
Data Response Question: Organic farming in decline
Chapter 14: Indirect taxes and subsidies
Indirect taxes and subsidies
The incidence of tax
Tax revenues
Ad valorem taxes
Subsidies
Taxes and elasticity
Subsidies and elasticity
Thinking like an economist: The French film industry
Data Response Question
Alcohol
2014 Budget measures
Chapter 15: Alternative views of consumer behaviour
Rationality vs behavioural economics
Reasons why consumers may not behave rationally
Thinking like an economist: Payday loans
Data Response Question
Microfinance initiative
Peso loans
Tesco
Chapter 16: Types of market failure
Market failure
Externalities
Under-provision of public goods
Information gaps
Thinking like an economist: Road congestion
Data Response Question: Heathrow expansion
Chapter 17: Externalities
Private and social costs and benefits
Externalities of production and consumption
Market failure
Marginal costs and benefits
Welfare losses with production externalities
Welfare losses with consumption externalities
Thinking like an economist: Mosquito nets
Data Response Question: Sugar
Chapter 18: Public goods
Public goods
The free rider problem
Thinking like an economist: Lighthouses
Data Response Question: Television viewing
Chapter 19: Information gaps
Imperfect market information
The market for second-hand cars
Market examples
Thinking like an economist: Payment protection insurance (PPI)
Data Response Question: Smoking
Chapter 20: Government intervention in markets
Government intervention to correct market failure
Indirect taxes
Subsidies
Maximum prices
Minimum prices
Regulation
Trade pollution permits
State provision of public goods
Provision of information
Thinking like an economist: China's pollution problems
Data Response Question: Carbon dioxide emissions from motor vehicles
Chapter 21: Government failure
Government failure
Distortion of price signals
Unintended consequences
Excessive administrative costs
Information gaps
Conflicting objectives
Politicians maximising their own welfare
Market vs government failure
Thinking like an economist: Venezuela in crisis
Data Response Question: Government failure
Theme 2: The UK economy - performance and policies
Chapter 22: Measures of economic performance
Microeconomics and macroeconomics
National economic performance
Economic growth
Unemployment
Inflation
The current balance
Thinking like an economist: The Irish economy
Data Response Question: Spain 2001-2014
Chapter 23: The characteristics of aggregate demand
Aggregate demand
The aggregate demand curve
Shifts in the AD curve
Important notes
Thinking like an economist: Aggregate demand
Data Response Question: Optimism rises for the Spanish economy
Chapter 24: Consumption
Defining consumption and saving
Consumption and income
Other determinants of consumption
The determinants of saving
Thinking like an economist: Determinants of UK consumption
Data Response Question: Consumption
Chapter 25: Investment
A definition of investment
The rate of interest
The rate of economic growth - the accelerator theory
Costs
Business expectations and confidence
The world economy
Access to credit
Retained profit
The infl uence of government and regulations
Thinking like an economist
Investment in the UK
The determinants of investment
Data Response Question: Little appetite for investment
Chapter 26: Government expenditure and net trade
Reasons for government spending
Exports and imports
Thinking like an economist: French cuts in government spending
Data Response Question: UK trade deficits
Chapter 27: Aggregate supply
The short-run aggregate supply curve
Shifts in the short-run aggregate supply curve
The long-run aggregate supply curve
Shifts in the long-run aggregate supply curve
The classical and Keynesian long-run aggregate supply curves
Thinking like an economist
The case of oil
The impact on the short-run aggregate supply curve
The impact on the long-run aggregate supply curve
Data Response Question: Aggregate supply 2007-2013
Chapter 28: National income
Income, output and expenditure
Injections and withdrawals
Thinking like an economist: Increasing investment
Data Response Question: Circular flow of income
Chapter 29: Equilibrium levels of real national output
Equilibrium output in the short run
Equilibrium output in the long run
A rise in aggregate demand
A rise in long-run aggregate supply
Increasing aggregate demand and supply
Thinking like an economist: Demand and supply side shocks in four recessions
Data Response Question: The UK economy: stagnation 2010-13
Chapter 30: The multiplier
The multiplier
Calculating the multiplier
The multiplier effect and injections
The multiplier effect and withdrawals
The multiplier and the aggregate demand curve
Effects of the economy on the multiplier
Thinking like an economist: IMF encourages investment in infrastructure
Data Response Question: The multiplier
Chapter 31: Economic growth
Measures of national income
Real or volume vs nominal or value
Total and per capita
Transfer payments
Why is national income measured?
The accuracy of national income statistics
Comparing national income over time
Comparing national income between countries
Purchasing power parities
Income and wealth
National income, economic welfare and happiness
Thinking like an economist: UK National Well-being programme
Data Response Question: Living standards
Chapter 32: Causes of economic growth and the trade cycle
Economic growth
The trade cycle
Two types of trade cycle
Causes of the trade cycle
The output gap
Hysteresis
The production possibility frontier
The causes of long-run economic growth
Land
Labour
Capital
Technological progress
Efficiency
Aggregate demand
Four distinctions
Thinking like an economist: Economic growth in the UK economy
Data Response Question: Poland, Portugal and the eurozone
Chapter 33: The impact of economic growth
Economic growth
The benefits of economic growth
Growth is unsustainable
Increasing inequalities
Growth and happiness
The anti-growth lobby
The impact of economic growth
Thinking like an economist: The standard of living in the UK since 1900
Data Response Question: Comparative living standards in the UK
Chapter 34: Inflation
Inflation, deflation and disinflation
Measuring inflation
The accuracy of price indices
The causes of inflation
The costs of high inflation
The costs of deflation
The benefits of low inflation
Thinking like an economist: The Retail Prices Index and Consumer Prices Index
Data Response Question
Inflation in Brazil
Deflation in Spain
Chapter 35: Employment and unemployment
Definitions
Causes of unemployment
Using diagrams to illustrate unemployment
Employment, unemployment and activity rates
Migration
Skills
The costs of unemployment
Thinking like an economist: Measuring unemployment
Data Response Question: Unemployment rates
Chapter 36: Balance of payments
The interconnectedness of economies
The balance of payments account
The current account
Current account imbalances and macroeconomic objectives
Government deficits and balance of payments deficits
Thinking like an economist
The parts of the current account
The current account over time
The size of the current account balances
Data Response Question: UK exports
Chapter 37: Possible macroeconomic objectives
Government objectives
Economic growth
Unemployment and employment
Inflation and deflation
The balance of payments on current account
Government budgets
The environment
Income distribution
Thinking like an economist: A tale of four economies
Data Response Question: Missed objectives
Chapter 38: Demand-side policies
Monetary and fiscal policies
Monetary policy
Interest rates as a monetary policy instrument
Quantitative easing
The role of the Bank of England
Fiscal policy
Direct and indirect taxes
Fiscal policy and aggregate demand
Monetary policy and aggregate demand
Strengths and weaknesses of demand-side policies
Thinking like an economist: The Great Depression and the Global Financial Crisis
Data Response Question: Germany rejects spending increase
Chapter 39: Supply-side policies
Supply-side policies
Market based and interventionist approaches
Increasing incentives
Promoting competition
Reforming the labour market
Improving the skills and quality of the labour force
Improving infrastructure
Encouraging the growth of small and medium-sized businesses
Strengths and weaknesses of supply-side policies
Thinking like an economist: North east England
Data Response Question: Boosting engineering skills and research
Chapter 40: Conflicts and trade-offs
Macroeconomic objectives
A successful sustainable economy
Conflicts between macroeconomic objectives
The short-run Phillips curve
Conflicts and trade-offs between economic policies
Thinking like an economist: UK policy conflicts 2010-14
Data Response Question: Bank of England's inflation target
Theme 3: Business behaviour and the labour market
Chapter 41: Business growth
The size of firms
The divorce of ownership from control
Public sector and private sector organisations
How businesses grow
Reasons for growth
Advantages and disadvantages of different types of growth
Constraints on business growth
Reasons for demergers
Impact of demergers
Thinking like an economist: Primark's expansion into the US market
Data Response Question: Celgene
Chapter 42: Revenue
Total, average and marginal revenues
Revenue curves
Revenue and price elasticity
Thinking like an economist: Revenue maximisation
Data Response Question: Finchfield Cycles
Chapter 43: Production
The short run and long run
The short run: diminishing returns
Total, average and marginal products
The long run: returns to scale
Thinking like an economist: Increasing returns at petrol stations
Data Response Question: Overfishing
Chapter 44: Costs
The economic definition of cost
Fixed and variable costs
Total, average and marginal cost
Diminishing returns and short-run costs
Short-run cost schedules
Short-run cost curves
Points to note
Economies of scale and long-run average cost
The optimum level of production
Sources of economies of scale
Diseconomies of scale
Movements along and shifts in the long-run average cost curve
The relationship between the short-run average cost curve and the long-run average cost curve
Thinking like an economist: Cost in the shipping industry
Data Response Question: Ocado vs the rest
Chapter 45: Profit
Profit
Normal and abnormal profit
Profit maximisation: the MC = MR rule
Cost and revenue curves
Shifts in cost and revenue curves
Shut down points in the short and long runs
Thinking like an economist: Difficult times for European car manufacturers
Data Response Question: The European steel industry
Chapter 46: Market structure
Market structure
The number of firms in an industry
Barriers to entry
Barriers to exit
Product homogeneity and branding
Knowledge
Interrelationships within markets
Competition and market structure
Thinking like an economist: Industry and concentration ratios
Data Response Question: Eurostar
Chapter 47: Perfect competition
Assumptions
Demand and revenue
Cost and supply curves
Short-run equilibrium
Long-run equilibrium
Long-run cost curves
Thinking like an economist: The uranium market
Data Response Question: Coal
Chapter 48: Monopolistic competition
Imperfect competition
Assumptions
The downward sloping demand curve
Short-run equilibrium
Long-run equilibrium
Thinking like an economist: Tattoo parlours
Data Response Question: The decline of the pub
Chapter 49: Oligopoly
The importance of oligopoly
Market structure
Collusion
Game theory and collusion
Types of price competition
Types of non-price competition
Thinking like an economist: The UK new car market
Data Response Question: Broadcast football
Chapter 50: Monopoly
Assumptions
Sources of monopoly power
Revenue curves
Equilibrium output
Discriminating monopoly
Costs and benefits for producers and consumers from price discrimination
Four technical points
Thinking like an economist: Virgin Wolverhampton to London
Data Response Question: Motorway service stations
Chapter 51: Monopsony
Monopsony
Equilibrium price and output under monopsony
Costs and benefits
Bilateral monopoly
Monopsony power
Thinking like an economist: Monopsony market power
Data Response Question: Suppliers' fees
Chapter 52: Contestability
Contestable market theory vs neo-classical theory
Assumptions
Normal and abnormal profit
Entry to and exit from the industry
Potential competition
Degrees of contestability
Thinking like an economist: The air passenger market
Data Response Question: The bus market
Chapter 53: Business objectives
Control
Short-run profit maximisation
Long-run profit maximisation
Divorce of ownership from control
Revenue maximisation
Sales maximisation
Thinking like an economist: What is the objective of a UK bank?
Data Response Question: Falling oil prices
Chapter 54: Efficiency
Efficiency
Static vs dynamic efficiency
Productive efficiency
X-inefficiency
Allocative efficiency
Dynamic efficiency
Efficiency and the production possibility frontier
Thinking like an economist: The misallocation of resources in transport
Data Response Question: Outsourcing
Chapter 55: Evaluating competition and monopoly
Competition
Perfect competition, contestable markets and static efficiency
Imperfect competition and static efficiency
Competition and dynamic efficiency
Evaluating competition
Monopoly
Natural monopoly
Multi-plant monopolists
Innovation
Evaluating monopoly
The theory of the second best
Thinking like an economist: Eating out
Data Response Question: King of the castle
Chapter 56: Government intervention and product markets
Controlling monopolies
Promoting competition and contestability
Government intervention to protect suppliers
Government intervention to protect employees
The effectiveness of government intervention
Thinking like an economist: UK and EU competition policy
Data Response Question: Controlling monopoly power
Chapter 57: Demand for labour
The downward sloping demand curve
The long-run demand for labour
The short-run demand for labour
The demand curve for labour
Shifts in the the demand curve for labour
Perfect and imperfect competition
Determinants of the elasticity of demand for labour
Thinking like an economist: Executive pay
Data Response Question: North Sea oil and gas workers
Chapter 58: Supply of labour
The supply curve for an individual worker
Income and substitution effects
Monetary and non-monetary considerations
Supply of labour to a firm
The supply curve of labour for an industry
Elasticity of supply of labour
Supply of labour to the economy
The mobility of labour
Thinking like an economist: The supply of labour in the UK
Data Response Question: Ethnic groups in the labour force
Inactivity
Characteristics of ethnic groups in employment
Chapter 59: Wage determination
How wage rates are determined
Elasticities of demand for and supply of labour
A labour market where all workers are paid the same
Why wage rates differ
Perfectly competitive labour markets
Imperfectly competitive labour markets
A monopoly buyer of labour
A monopoly seller of labour - trade unions
Bilateral monopoly
The power of trade unions
Efficiency
Thinking like an economist: Wage determination
Data Response Question: UK car manufacturing
Chapter 60: Government intervention in labour markets
Minimum wages/the living wage
Maximum wages
Public sector wage setting
Policies to tackle labour market immobility
Labour market issues
Thinking like an economist: The National Minimum Wage and the Living Wage
Data Response Question: Too many low skilled jobs?
Theme 4: A global perspective
Chapter 61: Globalisation
The characteristics of globalisation
The causes of globalisation
Impact on consumers
Impact on workers
Impact on producers
Impact on governments
Impact on the environment
Impact on individual countries
Non-economic impact of globalisation
The costs and benefits of globalisation
Thinking like an economist: The UK and globalisation
Data Response Question: China
Chapter 62: Specialisation and trade
Reasons for international trade
Patterns of trade
Absolute advantage
Comparative advantage
The assumptions of the theory of comparative advantage
The terms of trade
Why comparative advantage exists
Non-price theories of trade
The benefits of trade
The costs of trade
Thinking like an economist: The pattern of UK trade
Data Response Question: Impact of economic sanctions on Russia
Chapter 63: The terms of trade
Calculating the terms of trade
Factors influencing the terms of trade
Effects of changes in the terms of trade on the balance of payments
Effects of changes in the terms of trade on the domestic economy
Thinking like an economist: Norway compared to the UK
Data Response Question: Deterioration in Australia's terms of trade
Chapter 64: Trading blocs
Trading blocs
Advantages and disadvantages of trading blocs
Thinking like an economist: Trading blocs
Data Response Question: Regional trade agreements
Chapter 65: Common markets and monetary unions
A common market
Stages of economic integration
Trade creation and trade diversion
Free trade vs customs unions
Economies of scale
Competition
Transfers of resources
Monetary unions
The European Central Bank (ECB)
Fiscal policy rules
The advantages of monetary union for eurozone countries
The disadvantages of monetary union for eurozone countries
Conditions necessary for the success of a monetary union
Thinking like an economist: Advantages and disadvantages of Britain's membership of the EU
Data Response Question: Should Britain leave the EU?
Chapter 66: The World Trade Organization
World trade and GATT
World Trade Organization
The Doha Round
Multilateral vs regional trade agreements
Criticisms of the World Trade Organization
Thinking like an economist: The Bali Agreement
Data Response Question: Trade disputes at the WTO
Chapter 67: Restrictions on free trade
Restrictions on free trade
Tariffs
Quotas
Subsidies
Administrative barriers
Exchange rate manipulation
Reasons for restrictions on trade
Impact of protectionist policies
Free trade vs protectionism
Thinking like an economist: Australian car industry
Data Response Question: Shoe and textile tariffs
Chapter 68: Balance of payments issues
Components of the balance of payments
Reasons for international capital flows
Advantages and disadvantages of international capital flows
Causes of surpluses and deficits on the current account
Measures to reduce imbalances on the current account
Global trade imbalances
Financial crises
Default
Correcting imbalances
Thinking like an economist: The problem of the UK current account balance
Data Response Question: France: a deteriorating current account position
Chapter 69: Exchange rate systems
The exchange rate
Equilibrium exchange rates
Shifts in the demand and supply curves for a currency
Speculative activity
The purchasing power parity theory of exchange rates
Floating exchange rate system
Fixed exchange rate systems
Managed exchange rate systems
Influencing the exchange rate under a managed exchange rate system
The advantages and disadvantages of different exchange rate systems
Thinking like an economist: The Bretton Woods system
Data Response Question: The Swiss franc and the Danish krone
Chapter 70: The impact of changes in exchange rates
Exports and imports
The effects of a fall in the value of the exchange rate
Devaluation and elasticity
Devaluation and pricing strategies
Problems associated with devaluation
Inflation, growth and unemployment
Foreign direct investment
Thinking like an economist: A missing J curve?
Data Response Question: Appreciation of the pound, 1996-2001
Chapter 71: International competitiveness
Competitiveness
Measures of competitiveness
Factors influencing competitiveness
Benefits of being internationally competitive
Problems of sustaining international competitiveness
Government policy
Thinking like an economist: Finland
Data Response Question: Hourly labour costs in the UK
Chapter 72: Inequality and poverty
Resource allocation, equality and equity
The distribution of resources in a capitalist market economy
Causes of inequality in income
Causes of inequality in wealth for individuals
Measuring inequality
Absolute and relative poverty
The causes of poverty
The effects of poverty
Causes of changes in absolute and relative poverty
Horizontal and vertical equity
Thinking like an economist
Trends in the distribution of income
The distribution of wealth
Absolute and relative poverty
Data Response Question: Absolute and relative poverty
Chapter 73: Redistribution of income and wealth
The distribution of income and wealth
Government expenditure
Taxation
Other policies to reduce inequalities and poverty
The costs of redistribution: a free market perspective
Minimising the costs of redistribution
Thinking like an economist: Reducing inequalities in the UK
Data Response Question: Growth and inequality
Chapter 74: Measures of development
Classification of countries
Characteristics of developing countries
Growth vs development
Measures of economic development
Thinking like an economist: India and education
Data Response Question: Equatorial Guinea
Chapter 75: Factors influencing growth and development
Complexity
Political and institutional factors
Education and skills
Infrastructure
Technology
Absolute poverty
Income distribution
Access to credit and banking including microfinance
Demographic factors
International trade
Commodities
The savings gap, foreign aid and the Harrod-Domar model
Debt
Foreign direct investment (FDI) and portfolio capital flows
Remittances
Gender issues
The environment
Non-economic factors
Thinking like an economist: Millennium goals
Data Response Question: Millennium goals
Chapter 76: Strategies influencing growth and development
Different types of development strategy
Trade liberalisation vs protectionism
Government subsidies
Exchange rates
Infrastructure development
Developing a financial sector
Foreign Direct Investment (FDI) and joint ventures
Privatisation
Buffer stock schemes
The Lewis model
Development of primary industries
Tourism
Fair trade
Foreign aid
Debt relief
The role of international financial institutions and non-government organisations
Thinking like an economist: India vs China
Data Response Question: Development in India
Chapter 77: Financial markets
Financial markets
The role of financial markets
Different types of financial institutions
Different types of markets
Market failure
Thinking like an economist: Payday lenders
Data Response Question: Financial institutions and market failure
Chapter 78: Central banks and financial market regulation
Central banks
Acting as banker to the government
Acting as banker to other banks
Regulator of the financial system
Types of regulation
Thinking like an economist: Financial regulation
Data Response Question: Shadow banking
Chapter 79: Public expenditure
The reasons for public expenditure
Reasons for changing size and composition of public expenditure
Current and capital expenditure and transfer payments
Living standards and equality
Taxation
Crowding out
Productivity and growth
Thinking like an economist: Public expenditure
Data Response Question: Sweden
Chapter 80: Taxation
The reasons for taxation
Types of taxes
The canons of taxation
Incentives to work and tax revenues
Income distribution
Real output, the price level and employment
The trade balance
FDI flows
Thinking like an economist
The main taxes in the UK
Progressive, proportional and regressive taxes
Data Response Question: Flat tax
Chapter 81: Public sector finances
Fiscal surpluses and deficits and the National Debt
Cyclical and structural deficits
Current budget deficits, primary budget deficits and actual budget deficits
Factors influencing the size of fiscal deficits and surpluses and the National Debt in nominal terms
Factors affecting fiscal deficits and surpluses and the National Debt as a percentage of GDP
Implications for other variables of fiscal deficits and National Debts
Thinking like an economist: The UK fiscal balance and the National Debt
Data Response Question: The British economy after the coalition
Chapter 82: Macroeconomic policies in a global context
Fiscal policy
Demand management
Measures to reduce fiscal deficits
Measures to reduce the National Debt
Monetary policy
Exchange rate policies
Supply-side policies
Direct controls
Macroeconomic policies and external shocks
Measures to control global companies
Problems facing policy makers
Thinking like an economist: Economic growth in Greece
Data Response Question: Argentina
Preparing for your AS and A level exams
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Edexcel AS/A Level Economics (Edexcel AS/A Level Economics 2015)

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