Economics GCSE

Economics GCSE glossary

447 key terms for Economics GCSE, A to Z, each linked to the topic pages that use it.

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A

Aggregate demand: Total demand, which severe inequality can suppress because wealthier individuals save a larger proportion of their income while lower-income earners spend…AQA
Aggregate Demand (AD): The total demand for goods and services within a particular market at a given overall price level and in a given period.Pearson Edexcel
Appreciation: An increase in the value of a currency in a floating exchange rate system.Pearson Edexcel
Asset accumulation: Saving and investing more by those with higher incomes, building greater wealth that generates more income through interest and dividends.AQA
Average cost: Also known as unit cost, it is the cost of producing a single unit, calculated by dividing total cost by the quantity produced (AC = TC / Q).AQA
Average costs: The cost per unit, which falls as fixed costs are spread over a larger output.AQA
Average revenue: The revenue generated per unit sold, calculated by dividing total revenue by the quantity sold.AQA
Average unit costs: The cost per unit of production, which falls as fixed costs are spread over a larger number of goods or services.AQA

B

Balance of payments: One of the four main macroeconomic objectives, alongside growth, employment and price stability, and distinguished from other objectives such as a fairer…AQA, OCR
Balance of trade: The difference in value between visible exports, which are goods sold abroad, and visible imports, which are goods bought from abroad.AQA
Balanced budget: A situation where government revenue, primarily from taxation, exactly equals government expenditure in a given financial year.AQA
Bank of England: The central bank, responsible for setting the base interest rate and maintaining financial stability; it does not serve the general public.AQA
Barriers to entry: High obstacles such as significant start-up costs and strong brand loyalty that prevent new competitors from easily entering the market and eroding the…AQA
Basic economic problem: The need for individuals and governments to constantly choose which desires to satisfy, because human desires are unlimited while resources are finite.AQA
Borrowing: Taking out loans, which becomes more expensive for producers when interest rates rise.AQA
Borrowing and saving: Interest rates represent the cost of borrowing and the reward for saving.AQA
Break-Even Point: The level of output where total revenue exactly equals total costs, resulting in zero profit or loss.Pearson Edexcel
Budget balance: The outcome when revenues and spending are compared, resulting in a surplus, a deficit, or a balanced budget if they are equal.AQA
Budget deficit: Arises when government spending exceeds revenue, requiring the government to borrow money to fund the shortfall.AQA, Pearson Edexcel
Budget surplus: Occurs when government revenue is greater than government expenditure, and can be used to pay down national debt but might slow economic growth by withdrawing…AQA
Building societies: Mutual institutions owned by their members, savers and borrowers, rather than shareholders, traditionally focusing on residential mortgages and savings.AQA
Business investment: Producers purchasing capital goods such as machinery, which higher interest rates generally decrease and lower interest rates encourage.AQA
Business survival: Often the main objective for new or struggling businesses, especially during economic downturns.AQA
Buyer and seller interaction: The interaction between those demanding a product and those supplying it, through which prices are established.AQA
Buyers and sellers: The two groups whose interaction in a market determines the prices of goods and services.AQA

C

Capital: Man-made resources used to produce other goods, like machinery, tools, and factory buildings; its reward is interest.AQA, Pearson Edexcel
Capital investment and technology: Investment in capital equipment, such as modern machinery, allows workers to produce more in less time.AQA
Central banking: The Bank of England is the UK's central bank, responsible for maintaining monetary stability and overseeing the financial system.AQA
Ceteris Paribus: A Latin phrase meaning 'all other things remaining equal'.Pearson Edexcel
Change in quantity demanded: A movement along the demand curve, caused by a change in the good's own price rather than a shift of the curve.AQA
Change in supply: A shift of the entire supply curve caused by non-price factors altering the quantity producers are willing and able to sell at every price level.AQA
Circular flow of income: A continuous flow within the economy, created because income earned by households in factor markets dictates their purchasing power in product markets.AQA
Claimant Count: The number of people claiming unemployment-related benefits, such as Jobseeker's Allowance.AQA
Commercial banking: High street banks acting as vital financial intermediaries in the economy, providing essential services to savers and borrowers.AQA
Commercial banks: Profit-seeking institutions offering loans and savings accounts to individuals and businesses.AQA
Communication problems: Breakdowns between parts of a large firm, such as headquarters and regional branches, leading to costly delays and duplicated efforts.AQA
Comparative Advantage: When a country can produce a good or service at a lower opportunity cost than another country.Pearson Edexcel
Competition: A market situation with many small firms, often identical products and low barriers allowing new producers to enter easily.AQA, Pearson Edexcel
Competitive advantage: The advantage larger firms often have over smaller ones, allowing them to increase profit margins or lower selling prices to attract more customers and gain a…AQA
Competitive market: A market with many buyers and sellers where barriers to entry are low, so high profits attract new entrants, increasing total market supply and driving down…AQA
Competitive markets: A market featuring intense rivalry among firms, with a large number of buyers and sellers, homogeneous products, low barriers to entry and exit, and good…AQA
Complementary goods: Goods that are used together, so that the demand for one increases when the quantity demanded of the other rises.AQA
Complements: Related goods that are used together, so the price of one affects the demand for the other.AQA
Compound interest: Interest calculated on the principal plus any previously accumulated interest, so each year's interest is calculated on the new total balance.AQA
Conditions of supply: Changes in non-price factors that cause a shift of the supply curve.AQA
Consumer affordability: Elastic supply is advantageous because an increase in demand leads to a smaller price increase, whereas inelastic supply causes prices to spike sharply,…AQA
Consumer and Producer Welfare: The quantification of economic benefit through surplus.Pearson Edexcel
Consumer behaviour: Higher interest rates typically reduce consumer spending, while lower interest rates encourage consumers to spend more.AQA
Consumer choice: A benefit of globalisation for UK consumers, who gain a wider variety of goods due to cheaper imports.AQA
Consumer income and preferences: Consumer income is a determinant of demand, and changes in consumer tastes and preferences are additional factors which influence demand.AQA
Consumer Price Index (CPI): A measure of the rate of inflation that tracks the changing cost of a representative 'basket' of goods and services bought by a typical UK household.AQA
Consumer Prices Index: The main measure of inflation in the UK, calculated by tracking the prices of a basket of goods and services that represents the spending habits of a typical…AQA
Consumer responsiveness: How far quantity demanded reacts to a change in price, described as relatively unresponsive when demand is price inelastic and highly responsive when demand…AQA
Consumer welfare: Trade improves the overall standard of living by giving consumers a wider choice of goods and services and lower prices.AQA
Consumers: Individuals or households that purchase goods and services to satisfy their needs and wants, aiming to maximise their own utility or satisfaction.AQA
Contraction: Less quantity demanded as price rises, occurring as a movement along the demand curve.AQA
Contribution per Unit: The difference between the selling price of a product and its variable cost per unit.Pearson Edexcel
Coordination and control issues: A lack of coordination across sprawling departments in large, complex firms that makes them too complex to manage efficiently.AQA
Coordination problems: Arise when different parts of the business fail to work together smoothly.AQA
Cost calculation: Average cost is calculated by dividing total cost by the quantity produced.AQA
Cost minimisation: A drive that often conflicts with ethical and moral interests, for example when a clothing manufacturer reduces costs by sourcing materials from factories…AQA
Cost of borrowing: The expense to producers of taking out loans, which increases when interest rates rise and makes financing new machinery or premises more expensive.AQA
Cost of living: What the CPI measures for a typical household, rather than for every individual.AQA
Cost-push inflation: Happens when the costs of production for firms increase, and they pass these higher costs onto consumers as higher prices.AQA
Costs and benefits analysis: Weighing up the costs and benefits of different choices in every economic decision.AQA
Costs of production: These include wages, raw materials and energy, and a rise in them reduces the supply of a good or service at any given price.AQA
Credit creation: Commercial banks accept deposits from individuals and businesses and use these funds to provide loans and mortgages.AQA
Cross Elasticity of Demand (XED): A measure of the responsiveness of quantity demanded of one good to a change in the price of another good.OCR
Currency appreciation and depreciation: A rise in the price of the pound is appreciation, while a fall in its value against other currencies is depreciation.AQA
Current account: Records the value of a country's trade in goods and services, plus primary and secondary income flows, with the rest of the world.AQA, Pearson Edexcel
Current Account Deficit: A current account deficit occurs when the value of imports and income outflows exceeds the value of exports and income inflows.AQA, OCR, Pearson Edexcel
Current account surplus: Arises when the total value of inflows, meaning exports and income received, exceeds the total value of outflows, meaning imports and income paid.AQA
Customs union: An arrangement, like the EU, in which members have a common external tariff.AQA
Cyclical unemployment: Also known as demand-deficient unemployment, caused by a general downturn in economic activity during a recession, where falling aggregate demand leads to…AQA

D

Decrease in demand: A leftward shift of the demand curve, caused by factors such as falling incomes, cheaper substitutes, more expensive complements, negative publicity, or…AQA
Deductions: Mandatory and voluntary amounts such as Income Tax, National Insurance contributions and pension contributions that are subtracted from gross pay.AQA
Deindustrialisation: The decline of the secondary sector over time.AQA, Pearson Edexcel
Demand: The quantity of a good or service that consumers are willing and able to buy at a given price during a specific time period.AQA, Pearson Edexcel
Demand curve: A graphical representation of the relationship between the price of a good or service and the quantity demanded by consumers over a given period.AQA
Demand curves: A relatively shallow curve represents price elastic demand, while a steeper curve shows price inelastic demand.AQA
Demand-pull inflation: Occurs when aggregate demand in an economy outpaces aggregate supply, often described as too much money chasing too few goods.AQA
Depreciation: A decrease in the value of a currency in a floating exchange rate system.Pearson Edexcel
Derived demand: The demand for labour is derived from the demand for the goods and services workers produce.AQA, Pearson Edexcel
Determinants of supply and demand: Non-price factors, such as an increase in consumer income or a fall in production costs, that shift the supply or demand curve.AQA
Direct taxes: Taxes levied directly on the income, wealth, or profits of individuals and businesses, and the burden cannot be passed on to someone else.AQA
Diseconomies of scale: Occur when a firm grows so large that its average total costs begin to rise as output increases.AQA
Disequilibrium: A state at a specific price in which quantity demanded and quantity supplied are not equal, as with excess demand or excess supply.AQA
Disposable income: What homeowners have less of when mortgage rates increase, further reducing their spending on goods and services.AQA
Distribution of income and wealth: How income and wealth are shared among groups, affected differently by inflation as it creates winners and losers.AQA
Distribution of wealth and income: Deciding who is to benefit from the goods and services produced determines how the output is distributed among the population, such as whether it is based on…AQA
Division of labour: A specific type of specialisation where the production process is broken down into separate, distinct tasks, with different workers assigned to each task.AQA, Pearson Edexcel
Dynamic efficiency: Where high profits are reinvested into research and development, potentially improving product quality and leading to innovative products.AQA

E

Economic activity: The process of producing goods and services to satisfy needs and wants.AQA
Economic Agent: An individual, firm, or government that makes economic decisions regarding the allocation of scarce resources.Pearson Edexcel
Economic agents: Consumers, producers and government are the main economic groups whose decisions drive the allocation of scarce resources.AQA
Economic decision making: Driven by the basic economic problem forcing society to decide what to produce, how to produce it, and for whom to produce.AQA
Economic efficiency: What the market system fails to achieve when it cannot allocate resources efficiently.AQA
Economic growth: High domestic economic growth typically increases incomes, leading to higher spending on imported goods and worsening the current account balance.AQA
Economic growth vs inflation: A primary conflict in which stimulating the economy to boost growth and reduce unemployment increases aggregate demand and, near full capacity, causes…AQA
Economic inequality: When earnings are unevenly distributed across a population, caused by differences in wages, wealth, unemployment, state benefits, part-time or insecure work,…AQA
Economic integration: Deep integration accelerated by advancements in technology, transport and communications that lower the costs of sharing information and moving goods globally.AQA
Economic management: The government's role of setting objectives and using policies to achieve them in the economy.AQA
Economic measurement: How each of the government objectives is measured, such as using Gross Domestic Product for economic growth or the Consumer Prices Index for inflation.AQA
Economic output: What is produced, classified as either a good or a service.AQA
Economic performance indicators: Specific measures used to measure each objective, such as the Consumer Prices Index for inflation.AQA
Economic resource: Any input used to produce goods and services that satisfy human wants.AQA
Economic systems: The structure shaped by the decisions of what to produce, how to produce, and who is to benefit.AQA
Economic welfare: Overall welfare and living standards, which are reduced when the socially optimum level of output is not achieved.AQA
Economies of scale: A decrease in a business's average unit costs of production as its scale of operations and total output increase.AQA, Pearson Edexcel
Effective demand: The desire to own the product together with the financial means to purchase it.AQA
Efficiency and cost management: Producers must constantly monitor their costs and operate efficiently to maintain profitability, as high competition restricts their ability to raise prices…AQA
Efficiency and resource allocation: Scarce resources are allocated efficiently without central planning as prices signal producers to supply more or develop alternatives.AQA
Elastic Demand: When the percentage change in quantity demanded is greater than the percentage change in price (PED > 1).OCR
Elasticity classification: A value greater than 1 means price elastic demand, a value between 0 and 1 means price inelastic demand, and exactly 1 indicates unitary elasticity.AQA
Employment: The number of people of working age who are in work.AQA
Employment and unemployment: Globalisation creates employment opportunities in export-driven industries, but a major drawback is structural unemployment as manufacturing jobs may be…AQA
Enterprise: The willingness to take risks and organise the other three factors to run a business, rewarded by profit.AQA, Pearson Edexcel
Environmental externalities: Negative effects such as pollution that increased production generates, creating a conflict between economic growth and environmental protection.AQA
Environmental protection: This objective focuses on sustainable development and reducing negative externalities, such as pollution and carbon emissions, to preserve resources and…AQA
Equilibrium price: The exact price at which the quantity demanded by consumers equals the quantity supplied by producers, meaning there is no excess demand or excess supply.AQA, Pearson Edexcel
Equilibrium Wage Rate: The wage rate at which the quantity of labour demanded by firms exactly equals the quantity of labour supplied by workers.Pearson Edexcel
Equity versus efficiency: Redistribution reduces inequality, but disincentive effects on work and enterprise and the poverty trap can negatively impact overall economic output.AQA
Ethical and moral interests: Principles of right and wrong guiding business decisions, involving doing what is considered morally right, beyond legal requirements.AQA
Ethical and social objectives: Goals such as reducing environmental impact that prioritise societal welfare alongside or instead of profit.AQA
Excess demand: A situation where the quantity demanded is greater than the quantity supplied at a specific price, usually because the price is below equilibrium.AQA
Excess supply: A situation where the quantity supplied is greater than the quantity demanded at a specific price, typically when the price is above equilibrium.AQA
Excess supply and demand: A price above equilibrium creates excess supply (surplus), while a price below equilibrium creates excess demand (shortage).AQA
Exchange: Through trade, individuals and countries obtain the variety of goods they require, which specialisation necessitates.AQA
Exchange Rate: The price of one currency expressed in terms of another currency.OCR, Pearson Edexcel
Exchange rates: A strong rate makes exports expensive and imports cheap, while a weak rate boosts export demand and makes imports more expensive.AQA
Expenditure-reducing policies: Policies such as contractionary fiscal policy or monetary policy that aim to reduce domestic demand, thereby lowering the consumption of imported goods.AQA
Expenditure-switching policies: Policies like tariffs or quotas that encourage consumers to switch from foreign imports to domestically produced goods.AQA
Exports: Services such as financial services, insurance and education, and physical goods such as machinery, pharmaceuticals and manufactured vehicles, sold abroad by…AQA
Extension: More quantity demanded as price falls, occurring as a movement along the demand curve.AQA
Extension in supply: An increase in price causes this, while a decrease causes a contraction.AQA
External cost: Found by subtracting the private cost from the social cost.AQA
External costs: Costs that the price mechanism ignores, imposed on third parties by production or consumption.AQA
External economies of scale: Cost benefits that occur when the whole industry grows, reducing average costs for every firm in that industry within a specific geographical area.AQA
External shocks: Events such as extreme weather affecting agricultural yields or sudden disruptions to global supply chains can drastically alter supply.AQA
Externalities: Costs or benefits affecting third parties, such as factory pollution or education, that arise alongside private costs.AQA
Externality: A spillover effect of an economic activity affecting third parties not directly involved in the transaction.AQA, Pearson Edexcel

F

Factor market: A marketplace where the services of the factors of production (land, labour, capital, and enterprise) are bought and sold, with businesses as the buyers and…AQA
Factor mobility: The ease of switching production lines, so that if a farmer can easily switch from growing carrots to potatoes, potato supply is more elastic.AQA
Factors of production: Increases in the quantity or quality of these cause economic growth, such as investment in capital machinery, technological advancements, or an expansion in…AQA, Pearson Edexcel
Fiat money: Money such as modern banknotes and coins that has value simply because a government declares it as legal tender and people trust it.AQA
Financial economies: Securing lower interest rates on loans due to lower perceived risk.AQA
Financial institutions: Commercial banks, investment banks, insurance companies, and pension funds that make up the financial sector.AQA
Financial intermediation: The process of channelling funds from those with surplus money (savers) to those who need it (borrowers and investing businesses).AQA
Financial performance: Understanding profit helps explain how firms make decisions regarding production levels and pricing strategies to maximise their financial returns.AQA
Financial risk: A higher risk of default leads to higher interest rates on loans, so unsecured loans carry higher rates than secured loans.AQA
Financial sector: A crucial part of the economy consisting of institutions that provide financial services to individuals, businesses, and the government.AQA
Financial stability: Ensuring the stability of the entire financial system by regulating and supervising major financial institutions and monitoring systemic risks to prevent…AQA
Firm growth: A common objective allowing firms to benefit from economies of scale and increase market share.AQA
Fiscal policy: Involves altering government spending and taxation, for example reducing income tax to increase disposable income, leading to higher consumption and aggregate…AQA, Pearson Edexcel
Fixed costs: Costs such as rent, machinery and management salaries that can be spread over a significantly larger number of goods or services as a firm grows.AQA, Pearson Edexcel
Fixed Exchange Rate: An exchange rate system where the government or central bank intervenes to maintain the currency's value at a specific target rate.Pearson Edexcel
Floating Exchange Rate: An exchange rate system where the value of the currency is determined by the market forces of supply and demand.Pearson Edexcel
Floating exchange rates: A system in which the value of a currency is determined by the market forces of demand and supply.AQA
Foreign direct investment: A key benefit for producers in less developed countries, allowing them to expand and adopt new technologies.AQA
Foreign Direct Investment (FDI): An investment made by a company or individual from one country into business interests located in another country.OCR, Pearson Edexcel
Foreign exchange markets: The market where an increase in the supply of pounds causes the currency's value to depreciate against other currencies.AQA
Free trade: The exchange of goods and services between countries without government intervention or restrictions.AQA
Free-trade agreement: A treaty between two or more countries designed to reduce or eliminate trade barriers like tariffs and quotas to encourage international trade.AQA
Frictional unemployment: A type of unemployment involving workers moving between jobs, a natural part of a dynamic economy as workers search for better-suited roles.AQA
Functions of money: Money acts as a medium of exchange, a store of value, a unit of account, and a standard of deferred payment, overcoming the inefficiencies of barter.AQA

G

GDP per capita: Total GDP divided by the population size, indicating the average income per person and serving as a better proxy for living standards.AQA
Globalisation: The process by which the world's economies become increasingly interconnected and interdependent.AQA, Pearson Edexcel
Good: A tangible item that can be seen, touched, and stored, and whose ownership can be transferred from the seller to the buyer.AQA
Goods: Tangible, physical items that can be seen, touched, and stored, typically produced in the primary and secondary sectors.AQA
Goods and services: Physical items, like smartphones, and services, like haircuts, to which the definition of supply applies equally.AQA
Government: The group that sets the rules for the economy, provides public goods and redistributes income, aiming to maximise the economic welfare of society.AQA
Government economic policy: Fiscal, monetary and supply-side measures whose effectiveness is evaluated against the four core aims.AQA
Government Failure: When government intervention leads to a net welfare loss and a deeper misallocation of resources than the original market failure.Pearson Edexcel
Government intervention: Policies used to correct market failures caused by externalities, aiming to reduce production or consumption of goods with negative externalities and increase…AQA
Government policies: Fiscal, monetary and supply-side tools that governments implement to achieve their objectives.AQA
Government revenue: Income for the government, of which taxation is the primary source, divided into direct and indirect taxes.AQA
Graphical analysis: Using supply and demand diagrams to visualise how market changes affect equilibrium price and quantity.AQA
Gross Domestic Product (GDP): The total value of all goods and services produced within a country's borders in a given time period (usually a year).Pearson Edexcel
Gross pay: The total amount of money an employee earns before any deductions are made, including basic salary or wage plus bonuses, overtime or commission.AQA

H

Human Capital: The skills, knowledge, and experience possessed by an individual or population.Pearson Edexcel
Human capital and training: Education and training improve the skills of the workforce, leading to fewer errors and faster work rates.AQA

I

Imperfect Information: A situation where economic agents do not have all the necessary facts to make a perfectly rational decision.Pearson Edexcel
Imports: Physical goods brought into the UK to meet consumer demand and supply domestic industries, including electrical machinery, vehicles, mineral fuels and…AQA
Incentives and disincentives: High taxation might disincentivise work and enterprise, and generous welfare benefits can create a poverty trap that discourages individuals from seeking…AQA
Incentives and risk: Profit provides an incentive to produce and rewards entrepreneurs for taking risks when starting or expanding businesses.AQA
Income: A flow of money received over time, such as wages, salaries, dividends, and interest.AQA
Income and wealth: Income is a flow of money over time, such as wages, whereas wealth is a stock of assets, such as property.AQA
Income distribution: A fair distribution of income aims to narrow excessive income and wealth gaps through progressive taxation and targeted welfare spending, ensuring all…AQA
Income Elasticity of Demand (YED): A measure of the responsiveness of quantity demanded to a change in consumer income.OCR, Pearson Edexcel
Income inequality: The uneven division of the country's total income among its population, with a significant gap between the highest and lowest earners.AQA
Income Tax: A common deduction taken from gross pay, alongside National Insurance contributions and pension contributions.AQA
Increase in demand: A rightward shift of the demand curve, meaning more is demanded at every price.AQA
Index numbers: Values used to compare prices to a base year, which is given an index value of 100.AQA
Indirect taxes: These raise production costs for goods with negative externalities, shifting supply left and reducing consumption towards the socially optimum level.AQA
Inelastic Demand: When the percentage change in quantity demanded is less than the percentage change in price (PED < 1).OCR
Inelastic supply of highly skilled labour: A restricted supply of labour in certain professions, which contributes to higher wages.AQA
Inferior Good: A good for which demand decreases as consumer income increases (negative YED).Pearson Edexcel
Inferior goods: Goods for which demand falls when consumer income increases.AQA
Inflation: Demand-pull inflation is a risk if the economy grows faster than its productive capacity, reducing purchasing power and acting as a cost.AQA, Pearson Edexcel
Inflation and price stability: Ensuring price stability involves keeping inflation low and stable, which protects the purchasing power of money.AQA
Inflation targeting: Setting the base interest rate to meet the government's inflation target, typically 2%.AQA
Interdependence: A defining feature where the actions of one firm, such as changing prices or launching a new advertising campaign, directly affect its rivals, prompting them…AQA
Interdependence and trade: Specialisation necessitates exchange, as workers and firms no longer produce everything they need, which introduces costs such as transport expenses and…AQA
Interdependence of markets: The relationship in which the income households earn in the factor market is then spent in the product market.AQA
Interest rate: The percentage converted into a decimal or fraction, by dividing by 100, to perform the calculation.AQA
Interest rates: The base interest rate determines the cost of borrowing and the reward for saving.AQA
Intergenerational transfers: Inheritance, where assets are passed down through generations, frequently driving wealth inequality.AQA
Intermarket relationships: Relationships in which a price change in one market shifts the demand curve in a related market, either to the left or the right.AQA
Internal economies of scale: Cost benefits that arise from the growth of the firm itself, including purchasing, technical, managerial, financial, marketing and risk-bearing types.AQA
Internalising the Externality: Government intervention (like a tax) that forces producers or consumers to pay the full social cost of their actions.Pearson Edexcel
International competitiveness: A long-term quality of domestic firms that supply-side policies can improve, for instance by investing in education to boost productivity, which helps…AQA
International trade: Countries trade to access goods they cannot produce domestically, benefit from lower costs, and increase consumer choice.AQA, Pearson Edexcel
Interpretation of numerical data: Reading the resulting PED value, ignoring the minus sign, to judge whether demand is price elastic, price inelastic or unitary elastic.AQA
Investment: Spending on capital goods, which falls when higher borrowing costs mean the expected return must exceed them.AQA

L

Labour: The human effort, both physical and mental, used in production, which earns wages.AQA
Labour Force Survey (LFS): A household survey asking about employment status, following International Labour Organization guidelines.AQA
Labour market: The place where workers sell their labour and employers buy it, allocating human resources to produce goods and services.AQA, Pearson Edexcel
Labour market dynamics: Differences in hours worked and part-time versus full-time employment, which are causes of income inequality.AQA
Labour markets: Where the supply and demand for labour affect wage rates for different occupations, so highly skilled workers command higher pay due to higher demand and…AQA
Labour Productivity: Output per worker, calculated as total output divided by the number of workers.AQA, Pearson Edexcel
Labour supply: Workers willing to work at a given wage.AQA
Land: All natural resources, such as physical space, minerals, and water, used as an input to produce goods and services; its reward is rent.AQA
Law of supply: As price increases, the quantity supplied increases, ceteris paribus, giving a positive relationship.AQA
Long Run: The period of time in which all factors of production are variable.OCR
Luxuries: Goods whose demand is elastic, in contrast with necessities.AQA

M

Macroeconomic objectives: The principal objectives of government policies: maintaining full employment, ensuring price stability, achieving economic growth and having a balance of…AQA
Macroeconomic policies: Various policies governments can use to influence the balance of payments, specifically to correct a persistent current account deficit.AQA
Macroeconomic trade-offs: When policies used to achieve one objective can have a negative impact on achieving other objectives.AQA
Managerial economies: The employment of specialist staff to increase efficiency in large firms.AQA
Market: Any place or mechanism where buyers and sellers interact to exchange goods and services, usually for money.AQA, Pearson Edexcel
Market clearance: The self-correcting mechanism, where prices settle at the equilibrium point where the supply and demand curves intersect, ensures this.AQA
Market definition: An opportunity for buyers and sellers to interact in order to establish price.AQA
Market economies: An economy in which resources are allocated by the price mechanism through the interaction of buyers and sellers, not the government.AQA
Market equilibrium: The equilibrium wage rate is established where the quantity of labour supplied by workers equals the quantity demanded by employers.AQA
Market Equilibrium and Disequilibrium: The state where planned demand equals planned supply (market clearing).Pearson Edexcel
Market equilibrium and price changes: When supply is inelastic, an outward shift in demand will cause a significant increase in price for consumers.AQA
Market failure: When the free market fails to allocate resources efficiently because the price mechanism ignores external costs, resulting in overproduction or…AQA
Market forces: Markets bring buyers and sellers together to exchange goods and services, allocating resources through the interaction of demand and supply.AQA
Market interactions: The constant interaction of consumers, producers and the government in markets, making decisions that collectively determine how scarce resources are allocated.AQA
Market power: The ability of producers in non-competitive markets to set prices rather than accepting a prevailing market price.AQA
Market share: The proportion of total sales in a market accounted for by a specific business, involving capturing a larger percentage of total industry sales compared to…AQA
Market Structure: The characteristics of a market that dictate the behaviour of firms within it, such as the number of firms and barriers to entry.Pearson Edexcel
Market structures: The characteristics of a market that influence firm behaviour, distinguished by factors such as the number of producers, the degree of product differentiation…AQA
Markets and exchange: The financial and physical exchanges between groups, including the physical exchange of labour, goods and services as well as money.AQA
Mathematical calculation in economics: Working out the percentage change in quantity demanded and in price, then dividing the first by the second to give the PED value.AQA
Maximisation of utility, profit, and welfare: The aim of weighing up choices to maximise utility for consumers, profit for producers, and social welfare for governments.AQA
Medium of exchange: A function of money that allows buyers and sellers to trade goods and services without relying on the inefficient barter system, which requires a double…AQA
Merit Good: A good that brings unanticipated benefits to consumers and society, which would be under-consumed in a free market.Pearson Edexcel
Misallocation of resources: A result of both positive and negative externalities, where the price mechanism fails to allocate resources efficiently.AQA
Mixed Economy: An economic system combining private enterprise and a degree of state monopoly/government intervention.Pearson Edexcel
Monetary policy: A demand-side policy used by a central bank to influence macroeconomic activity through changes to interest rates and the money supply.AQA, Pearson Edexcel
Monetary policy basics: Interest rates, set by the central bank, affect the reward for saving and the cost of borrowing.AQA
Money: Any item or verifiable record that is generally accepted as payment for goods and services and repayment of debts within a particular country or…AQA
Money supply: Increased through quantitative easing, involving the purchase of financial assets to inject money directly into the economy.AQA
Monopoly: A market structure where a single producer controls the entire supply of a good or service, meaning the firm is the industry.AQA, Pearson Edexcel
Motivation and management: Motivation and financial incentives encourage employees to work harder, while improvements in management practices and the organisation of the production…AQA
Movement along the curve: A change in price causes this along the existing supply curve, whereas a change in non-price factors shifts the entire curve.AQA
Movement along the demand curve: A change caused solely by a change in the price of the good itself, leading to an extension or contraction.AQA
Movement along the supply curve: Caused solely by a change in the price of the good itself, resulting in an extension or contraction in quantity supplied, while the curve itself does not move.AQA
Multinational companies: Companies that establish production facilities in countries with lower labour costs and sell products in multiple international markets.AQA
Multinational Corporation (MNC): A large business organisation that has operations in more than one country.Pearson Edexcel
Multinational corporations: Companies that often relocate production to developing countries to reduce costs, which creates jobs but raises concerns about worker exploitation.AQA
Mutual and corporate ownership: Building societies are mutual institutions owned by their members rather than shareholders, while banks are owned by shareholders seeking profit.AQA
Mutual institutions: Institutions owned by their members rather than shareholders.AQA

N

National debt: The national debt is the total accumulated amount the government owes, increased by borrowing to finance a budget deficit.AQA
National Minimum Wage (NMW): A legally mandated price floor on the hourly wage rate, set by the government, below which employers cannot legally pay their workers.Pearson Edexcel
Necessities: Goods like basic food that consumers must buy regardless of price, so demand is inelastic.AQA
Need: A good or service that is absolutely essential for human survival, such as basic food, clean water, clothing, and shelter.AQA
Needs: Essential items for survival, like food and shelter.AQA
Needs and wants: Human requirements that the production of goods and services is intended to satisfy.AQA
Negative externalities: Costs imposed on a third party outside of the market transaction, which can arise from both the production and consumption of goods and services.AQA
Negative externality: An unintended cost imposed on a third party, which the market ignores, leading to over-production.AQA, Pearson Edexcel
Net pay: The amount an employee actually receives after all mandatory and voluntary deductions have been subtracted, often referred to as take-home pay.AQA
New technology: A major factor driving the growth of globalisation, particularly in transport and communications.AQA
Nominal GDP: A measure that uses current prices, which can be misleading if prices rise.AQA
Non-competitive market: A market featuring a small number of dominant producers, or a single firm, controlling a large market share.AQA
Non-price competition: Competition such as branding, loyalty schemes and product differentiation that firms prefer over price wars, often leading to price rigidity.AQA, Pearson Edexcel
Non-price determinants: Factors other than the product's own price which influence demand, such as consumer income, the prices of related goods, tastes and preferences, advertising,…AQA
Normal and inferior goods: For normal goods demand rises as income increases, while for inferior goods an increase in income leads to a decrease in demand.AQA
Normal Good: A good for which demand increases as consumer income increases (positive YED).Pearson Edexcel
Normal profit: The level of profit that individual firms' falling profit margins decrease to in a competitive market as prices fall.AQA

O

Objectives of economic groups: Each economic group has different primary objectives, such as utility, profit and social welfare.AQA
Oligopoly: A market structure characterised by a small number of large firms dominating the industry, with the majority of market share concentrated among a few key…AQA, Pearson Edexcel
Oligopoly characteristics: A few large firms dominate the market, sitting between the extremes of competitive markets and monopoly.AQA
Opportunity cost: The foregone interest from saving that is higher when interest rates are high, even if a producer uses its own retained profits to fund investment.AQA, Pearson Edexcel

P

Percentage change: Found by dividing the difference between the new and old figures by the original figure and multiplying by 100.AQA
Phillips Curve: An economic concept showing an inverse relationship (trade-off) between the rate of inflation and the rate of unemployment.Pearson Edexcel
Policy conflicts: When policies used to achieve one objective can have a negative impact on achieving other objectives.AQA
Policy conflicts and trade-offs: Policies designed to achieve one of the objectives can often impact positively or negatively on achieving the other objectives.AQA
Policy trade-offs: Situations where achieving one economic objective often conflicts with another, so that pursuing one objective negatively impacts another.AQA
Poor communication: Occurs across multiple departments or locations, leading to misunderstandings and delays.AQA
Positive externality: An unintended benefit provided to a third party, which the market ignores, leading to under-consumption.AQA, Pearson Edexcel
Price and quantity relationship: The inverse relationship between price and quantity demanded, reflected in a demand curve that slopes downwards from left to right.AQA
Price and quantity relationships: Price and quantity demanded move in opposite directions, so the PED value is typically negative.AQA
Price competition: Lowering prices to increase market share, as consumers can easily switch to rivals.AQA
Price determination: The interaction between supply and demand determines the equilibrium price where the market demand curve intersects the market supply curve.AQA
Price elastic: When the result, ignoring the negative sign, is greater than 1, meaning consumers are highly responsive to price changes.AQA
Price elastic demand: A situation where a change in price leads to a proportionately larger change in the quantity demanded, so consumers are highly responsive to price changes.AQA, Pearson Edexcel
Price elastic supply: Occurs when the percentage change in quantity supplied is greater than the percentage change in price, with a PES value greater than 1.AQA, OCR
Price elasticity of demand: Measures the responsiveness of quantity demanded to a change in price, calculated by dividing the percentage change in quantity demanded by the percentage…AQA
Price Elasticity of Demand (PED): A measure of the responsiveness of quantity demanded to a change in price.OCR, Pearson Edexcel
Price elasticity of supply: Measures the responsiveness of the quantity supplied of a good or service to a change in its price.AQA
Price Elasticity of Supply (PES): A measure of the responsiveness of the quantity supplied of a good or service to a change in its price.OCR
Price inelastic: When the result is less than 1, indicating that quantity demanded changes proportionately less than price.AQA
Price inelastic demand: A situation where a change in price results in a proportionately smaller change in the quantity demanded, so consumers are relatively unresponsive to price…AQA, Pearson Edexcel
Price inelastic supply: Occurs when the percentage change in quantity supplied is less than the percentage change in price, with a PES value between 0 and 1.AQA, OCR
Price maker: A firm in a non-competitive market that possesses price-making power, allowing it to set its own prices rather than take them from the market.AQA, Pearson Edexcel
Price makers: Firms with significant market power, because they lack competition, to set higher prices to maximise their profits.AQA
Price making: Acting as a price maker, meaning having the market power to set prices rather than accepting a prevailing market price.AQA
Price mechanism: The market operates through wage signals, where a shortage of workers makes wages rise, signalling more people to train and employers to use labour more…AQA, Pearson Edexcel
Price setting power: The ability of firms in non-competitive markets to be 'price makers' rather than 'price takers', influencing prices and output.AQA
Price stability: Keeping inflation at a low and stable rate, a primary macroeconomic objective for the government to ensure economic certainty.AQA
Price takers: Firms that cannot dictate the market price and must accept the prevailing market price, otherwise consumers will buy from rivals.AQA
Price-making power: The significant ability of firms with little competition to set higher prices and restrict output to maximise profits.AQA
Primary sector: The part of the economy that involves the extraction and harvesting of natural resources, such as agriculture, mining, fishing, and forestry.AQA, Pearson Edexcel
Principal amount: The initial sum saved, which is multiplied by the interest rate to find the interest earned for one period.AQA
Private Cost: The cost borne directly by the producer or consumer involved in a transaction (e.g., a firm's raw materials or a consumer's purchase price).Pearson Edexcel
Private costs and benefits: Those borne directly by the producer or consumer in a transaction.AQA
Private Sector: The part of the economy owned and run by private individuals and businesses, driven by the profit motive.Pearson Edexcel
Producer revenue and profit: Elastic supply means producers can quickly increase production when prices rise, maximising revenue.AQA
Producers: Firms that supply goods and services, typically aiming to maximise profit by efficiently combining factors of production.AQA
Product differentiation: How firms make their products appear distinct from competitors through branding, design or unique features.AQA
Product market: The marketplace where final goods and services are bought and sold, with consumers as the buyers and businesses as the sellers.AQA
Production: The total volume or value of goods and services produced by a firm, industry, or economy over a given period, an absolute measure of output.AQA
Production capacity: Spare capacity such as idle machinery or unemployed workers lets a manufacturer increase output quickly without significant cost, making supply elastic.AQA
Production constraints: Complex production processes or a shortage of skilled labour, which make supply more price inelastic.AQA
Production methods: The choice of how to produce involves the methods and combinations of factors of production used, such as labour-intensive methods versus capital-intensive…AQA
Production of goods and services: The main purpose of economic activity is the production of goods and services that satisfy human needs and wants.AQA
Production versus consumption: A distinction between external costs arising from making a product and those arising from using it, which must be clearly stated.AQA
Productivity: The efficiency of the production process, calculated as the output produced per unit of input such as labour, capital, or time.AQA, Pearson Edexcel
Profit: The financial gain made when total revenue exceeds total costs, aiming to generate the greatest possible difference between the two to reward owners and fund…AQA, Pearson Edexcel
Profit incentive: The greater profit offered by higher prices, which usually increases the quantity supplied, ceteris paribus.AQA
Profit margins: The margins of individual firms that decrease as prices fall in a competitive market, until only normal profit is made.AQA
Profit maximisation: The primary motivation for most producers, which may conflict with ethical and moral interests.AQA, Pearson Edexcel
Profit motive: Higher prices offer greater profit margins, incentivising firms to increase output and attracting new firms to the market.AQA
Progressive tax: A tax that takes a higher percentage of income as an individual's income rises.AQA, Pearson Edexcel
Progressive taxation: A form of taxation used by the UK government to redistribute income and reduce income inequality.AQA
Progressive taxes: Taxes that are often direct and take a higher percentage from higher earners.AQA
Protectionism: Government policies that restrict international trade to help domestic industries.OCR, Pearson Edexcel
Public expenditure: The spending the government plans to allocate across various public sectors like healthcare, education, and defence.AQA
Public Good: A good that is non-excludable (you can't stop people using it) and non-rival (one person using it doesn't reduce its availability to others).Pearson Edexcel
Public Sector: The part of the economy controlled by the government, funded primarily through taxation.Pearson Edexcel
Purchasing economies: Bulk buying discounts gained by buying thousands of units directly from manufacturers at a lower unit price.AQA
Purchasing power: The amount of goods and services each pound can buy, which falls as the general price level rises.AQA

Q

Quota: A physical limit on the quantity of a specific good that can be imported over a set period.Pearson Edexcel
Quotas: Government-imposed limits on the flow of goods and services between countries.AQA

R

Rate of inflation: The percentage change in the general price level over a specific period, usually a year.AQA
Rational Behaviour: Decision-making that involves weighing up costs and benefits to maximise a specific objective.Pearson Edexcel
Rational decision making: A process where agents weigh up the costs and benefits of different alternatives to make a choice.AQA
Real GDP: A measure of output that is adjusted for inflation, providing a more accurate measure of actual output changes than nominal GDP.AQA
Real versus nominal values: Nominal values are not adjusted for inflation, while real values are adjusted for inflation.AQA
Regressive tax: A tax that takes a higher percentage of income from low-income earners than from high-income earners.AQA
Regressive taxes: Taxes that take a larger percentage from low earners, unlike progressive taxes which take a larger percentage from high earners.AQA
Regulation: This legally forces firms to change behaviour, such as banning harmful chemicals or setting emissions limits.AQA
Resource allocation: The process by which scarce resources are distributed, carried out by markets establishing a price that balances consumer demand with producer supply.AQA
Revenue: The income a firm receives from selling its goods or services over a given period.AQA
Reward for saving: The return on deposits, which increases when interest rates rise and incentivises consumers to save more.AQA
Risk and vulnerability: A highly specialised production process means that if one stage breaks down, the entire production line halts, and reliance on exchange brings vulnerability…AQA
Risk management: A function facilitated by institutions such as insurance companies, which offer financial protection against risks in exchange for regular premium payments.AQA

S

Sales growth: The objective of increasing the quantity or value of products sold over a period, seeking to achieve economies of scale or greater brand recognition.AQA
Satisficing: Aiming for an acceptable or 'good enough' outcome rather than the absolute maximum.Pearson Edexcel
Saving: Placing money in a financial institution, which becomes more attractive for retained profits when interest rates rise.AQA
Saving and borrowing: A service for savers and borrowers, where savers deposit funds and earn interest and borrowers receive loans and mortgages.AQA
Scale of production: The volume of output; a rise in it leads to a fall in average costs when economies of scale occur.AQA
Scarcity: The fundamental economic problem faced by societies because human desires are unlimited while the resources available to fulfil them are finite.AQA
Scarcity and choice: Resources are scarce and cannot satisfy all human wants, meaning choices must be made.AQA
Scarcity and resource allocation: Because resources are scarce, every economy must make three fundamental economic decisions, and these choices dictate resource allocation.AQA
Scarcity and the economic problem: Resources are scarce but wants are infinite, which forces economic agents to make choices.AQA
Seasonal unemployment: Happens when demand for labour fluctuates with the time of year, like fruit picking or tourism.AQA
Secondary sector: The part of the economy that encompasses manufacturing and construction, where raw materials are processed and assembled into finished or semi-finished goods.AQA
Service: An intangible action or task performed by someone else, which cannot be touched or stored for later use.AQA
Services: Intangible actions or tasks performed by individuals or businesses for others, primarily within the tertiary sector.AQA
Shift of the demand curve: A change of the entire demand curve when a non-price factor changes, such as consumer income, tastes, or prices of substitutes.AQA
Shift of the supply curve: Happens when non-price factors change, such as costs of production, technology, or taxes, causing the entire curve to move left or right.AQA
Shifts in demand: The movement of the demand curve for a related product either left or right when the price of one good changes.AQA
Shifts in supply and demand: An increase in demand shifts the demand curve right and raises the equilibrium wage, while an increase in supply shifts the supply curve right and lowers the…AQA
Short Run: The period of time in which at least one factor of production is fixed.OCR
Simple interest: Interest calculated only on the initial principal, using the principal amount, the interest rate and the time period.AQA
Single market: An arrangement in which the EU allows the free movement of goods, services, capital, and labour among member states.AQA
Social Cost: The total cost to society of an economic activity.Pearson Edexcel
Social costs and benefits: The total impact on society, calculated by adding private effects and external effects together.AQA
Social mobility: Movement between social positions, which inequality often reduces, meaning children from poorer backgrounds face barriers to education and career advancement.AQA
Social welfare: Overall economic welfare, which is lost when the optimal quantity of goods and services is not produced or consumed.AQA
Spare capacity: Its availability allows firms to increase output quickly without significant cost increases, making supply more elastic.AQA
Specialisation: Occurs when an economic agent, such as an individual, firm, or country, focuses on producing a narrow range of goods or services.AQA, Pearson Edexcel
Spectrum of competition: Markets exist along a range of different structures, from highly competitive environments to those dominated by a single firm.AQA
Standard of deferred payment: A function of money enabling borrowing and lending by allowing debts to be recorded and settled in the future.AQA
State provision: Governments directly provide public goods, like street lighting, which free markets ignore due to the free-rider problem.AQA
Store of value: A function of money meaning it can be saved and retrieved in the future without losing its purchasing power, provided inflation remains low.AQA
Strategic business objectives: Specific business objectives that guide a producer's strategic decision-making.AQA
Structural unemployment: A significant drawback for workers in developed nations as manufacturing jobs are offshored to countries with cheaper labour.AQA, Pearson Edexcel
Subsidies: These lower prices to encourage consumption of goods with positive externalities, such as renewable energy.AQA
Subsidy: A payment that reduces costs and shifts the supply curve to the right, while its removal decreases supply.AQA
Substitute and complementary goods: Related goods where a rise in the price of a substitute increases demand for the original good, whereas a rise in the price of a complement makes demand fall.AQA
Substitute goods: Goods that are alternatives to each other, so that consumers switch to one when the price of the other rises.AQA
Substitutes: Related goods that replace each other, so the price of one affects the demand for the other.AQA
Supply: The quantity of a good or service that producers are willing and able to sell at a given price in a given time period.AQA, Pearson Edexcel
Supply and demand: Market forces whose interaction determines the value of a currency in a floating exchange rate system.AQA
Supply and production: Higher prices encourage existing firms to increase their output, leading to an overall increase in market supply.AQA
Supply curve: A graphical representation of the relationship between the price of a good or service and the quantity producers are willing and able to supply at a given time.AQA
Supply schedule: A table showing the quantity a firm is willing to produce at various prices.AQA
Supply-side policies: Aim to increase the economy's long-term productive potential, for example by investing in education to improve workforce skills or building new transport…AQA, Pearson Edexcel
Sustainable development: Linked to environmental protection, it involves preserving resources and quality of life for future generations while reducing negative externalities such as…AQA

T

Tangibility and intangibility: The distinction between goods, which are physical products, and services, which cannot be touched or stored.AQA
Tariff: A tax or duty to be paid on a particular class of imports or exports.OCR, Pearson Edexcel
Tariffs: Government-imposed taxes on imports that act as artificial barriers to trade.AQA
Tax bands: Bands which the UK income tax system features, where crossing into a higher band increases the tax rate applied to that additional income.AQA
Taxation: The main way the UK government collects revenue, through direct and indirect taxes, to fund public services.AQA
Taxation and subsidies: Indirect taxes increase production costs to internalise negative externalities, while subsidies lower prices to encourage consumption of goods with positive…AQA
Taxation and welfare: Progressive taxation takes a larger percentage of income from higher earners, and the revenue funds transfer payments such as welfare benefits for…AQA
Technological change: A technological advancement that, along with societal shifts or changes in personal circumstances, can cause needs and wants to change over time.AQA
Tertiary sector: The part of the economy that provides services to consumers and other businesses, including retail, banking, education, and healthcare.AQA, Pearson Edexcel
The basic economic problem: Scarce resources, such as land, labour, capital, and enterprise, are limited in supply compared to infinite human wants.AQA
The Economic Problem: How to allocate scarce resources to satisfy unlimited human wants.Pearson Edexcel
The law of demand: The inverse relationship between price and quantity demanded, illustrated by a downward-sloping line.AQA
The money supply: The total amount of money in an economy, which includes physical banknotes and coins in circulation as well as electronic bank balances and demand deposits.AQA
The Multiplier Effect: The process by which an initial injection of spending into the economy leads to a proportionally larger final increase in national income (GDP).Pearson Edexcel
The price mechanism: The primary tool for allocating scarce resources, with prices acting as signals to producers and consumers, providing incentives to alter production levels,…AQA, Pearson Edexcel
The role of the central bank: The institution responsible for monetary policy, setting the base interest rate and using quantitative easing to influence the economy.AQA
Third party: Someone not directly involved in the economic transaction who bears a cost or receives a benefit.AQA, Pearson Edexcel
Third-party effects: Spillover effects of economic activity that affect third parties not directly involved in a transaction.AQA
Time Lags: The delay between an economic action (like a policy change) and its effect being fully felt in the economy.Pearson Edexcel
Time periods: A crucial determinant of elasticity, since supply is generally more inelastic in the short run as firms cannot easily acquire new capital, but becomes more…AQA
Time periods in economics: A crucial factor where supply is generally more inelastic in the short run because firms cannot instantly build new factories, whereas in the long run supply…AQA
Total cost: Calculated by adding total fixed costs and total variable costs together.AQA
Total deductions: Calculated by adding Income Tax, National Insurance, and other contributions.AQA
Total Factor Productivity: The amount of output produced relative to all inputs combined (land, labour, capital, enterprise).Pearson Edexcel
Total revenue: Calculated as Price multiplied by Quantity (TR = P × Q), shown as the rectangular area bounded by the origin, the equilibrium price, the equilibrium point and…AQA, OCR, Pearson Edexcel
Trade deficit: A situation where imports exceed exports.AQA
Trade Liberalisation: The removal or reduction of restrictions or barriers on the free exchange of goods between nations.Pearson Edexcel
Trade surplus: A situation where export revenue exceeds import expenditure.AQA
Trade Union: An organisation of workers established to protect and improve their economic interests and working conditions through collective bargaining.Pearson Edexcel
Trade-offs: What every decision involves because resources are scarce.AQA
Transnational Corporation (TNC): A large business that operates and has facilities or assets in at least one country other than its home country.Pearson Edexcel

U

Unemployment: Those without a job who are actively seeking work.AQA, Pearson Edexcel
Unit of account: A function of money providing a common measure to value and compare different goods and services.AQA
Unitary elastic supply: When the percentage changes in price and quantity supplied are exactly equivalent.AQA, OCR
Utility: The satisfaction or benefit derived from consuming a good or service.Pearson Edexcel

V

Variable costs: Business expenses that change directly with the level of output, like raw materials or hourly wages.AQA, Pearson Edexcel

W

Wage determination: Wages are determined by the interaction of labour supply and demand.AQA
Wage differentials: The differences in wages between different groups of workers, occurring both within the same occupation and between different occupations.AQA
Want: A good or service that is desired but not necessary for survival, such as a luxury smartphone, a holiday, or designer trainers.AQA
Wealth: A stock of accumulated assets owned at a specific point in time, including property, savings, shares, and pension pots.AQA
Wealth inequality: The unequal distribution of accumulated assets at a specific point in time, including property, savings, shares, and pension pots.AQA
Weighting: Items are weighted according to the proportion of household income spent on them, so fuel receives a higher weight than postage stamps.AQA
Welfare state: The welfare system through which the UK government redistributes income from higher earners to lower-income households to reduce inequality.AQA
Worker motivation: Repeating the same narrow task can lead to monotony and boredom, reducing motivation and potentially lowering productivity or increasing absenteeism.AQA

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