GCE Advanced Level (A-Levels) Economics Syllabus

Economics syllabus — full chapter and topic list

Expand any chapter to see its topics and sub-topics. This is the whole examinable outline for Economics in GCE Advanced Level (A-Levels), not a summary of it.

1. 1

   Introduction to Markets and Market Failure

   4 topics

   • The Economic Problem
     • Scarcity, choice and opportunity cost
     • The production possibility frontier
     • Positive and normative economics
   • Demand, Supply and Price
     • Determinants of demand and supply
     • Market equilibrium and the price mechanism
     • Consumer and producer surplus
   • Elasticities
     • Price, income and cross elasticity of demand
     • Price elasticity of supply
   • Market Failure and Government Intervention
     • Externalities and merit/demerit goods
     • Public goods and information gaps
     • Taxes, subsidies and government failure
2. 2

   The National and International Economy

   4 topics

   • Measuring Economic Performance
     • Economic growth and GDP
     • Inflation, unemployment and the balance of payments
   • Aggregate Demand and Supply
     • Components of aggregate demand
     • Short-run and long-run aggregate supply
     • The multiplier effect
   • Macroeconomic Policy
     • Fiscal and monetary policy
     • Supply-side policies
     • Conflicts between policy objectives
   • International Trade and Globalisation
     • Comparative advantage and trade barriers
     • Exchange rates
     • Globalisation and development
3. 3

   Microeconomic Theory of the Firm

   3 topics

   • Costs, Revenue and Profit
     • Short-run and long-run costs
     • Economies and diseconomies of scale
     • Profit maximisation
   • Market Structures
     • Perfect competition and monopoly
     • Monopolistic competition and oligopoly
     • Price discrimination and contestable markets
   • Labour Markets
     • Demand for and supply of labour
     • Wage determination and market imperfections
4. 4

   Financial Markets and Economic Development

   3 topics

   • The Financial Sector
     • Role of financial markets and the central bank
     • The 2008 financial crisis and regulation
   • Distribution of Income and Wealth
     • Causes of inequality and poverty
     • The Lorenz curve and Gini coefficient
   • Economic Development
     • Measures and barriers to development
     • Strategies for promoting growth and development

Economics flashcards for GCE Advanced Level (A-Levels)

23 of 56 cards from the Economics deck — real questions with worked answers.

1. What is the fundamental economic problem?

   Scarcity: human wants are infinite but resources (factors of production) are finite, forcing choices about how to allocate them.

2. Define opportunity cost and give its formula in terms of choice.

   Opportunity cost is the value of the next-best alternative forgone when a choice is made. If you choose A over B, the opportunity cost of A is the benefit you would have gained from B.

3. What are the four factors of production and their respective rewards?

   Land (reward: rent), Labour (reward: wages), Capital (reward: interest), Enterprise (reward: profit).

4. What does a production possibility frontier (PPF) show, and what does a point inside it indicate?

   The PPF shows the maximum combinations of two goods an economy can produce with full, efficient use of resources. A point inside indicates inefficiency / unemployed or underused resources; a point beyond is currently unattainable.

5. Distinguish positive and normative statements in economics.

   A positive statement is objective and testable against facts (what is). A normative statement is a value judgement about what ought to be and cannot be proven true or false.

6. State the law of demand and the direction of the demand curve.

   Law of demand: ceteris paribus, as price rises quantity demanded falls (and vice versa). The demand curve slopes downward (negative gradient).

7. List the main non-price determinants that shift the demand curve.

   Income, prices of substitutes and complements, tastes/fashion, population/demographics, advertising, expectations, and interest rates (for credit-financed goods).

8. State the law of supply and the direction of the supply curve.

   Law of supply: ceteris paribus, as price rises quantity supplied rises. The supply curve slopes upward (positive gradient).

9. What is meant by equilibrium price, and what happens at a price above it?

   Equilibrium price is where quantity demanded equals quantity supplied ($Q_d = Q_s$). Above it there is excess supply (a surplus), creating downward pressure on price.

10. Distinguish a movement along a demand curve from a shift of the demand curve.

    A movement along (extension/contraction) is caused only by a change in the good's own price. A shift is caused by a change in any non-price determinant of demand.

11. Define consumer surplus and producer surplus.

    Consumer surplus is the difference between the price consumers are willing to pay and the price they actually pay. Producer surplus is the difference between the price producers receive and the minimum they were willing to accept.

12. Give the formula for price elasticity of demand (PED).

    $$PED = \frac{\% \Delta Q_d}{\% \Delta P}$$ It is normally negative; demand is elastic if $|PED| > 1$ and inelastic if $|PED| < 1$.

13. How does PED relate to total revenue when price falls?

    If demand is elastic ($|PED|>1$), a price fall raises total revenue. If inelastic ($|PED|<1$), a price fall lowers total revenue. If unit elastic ($|PED|=1$), revenue is unchanged.

14. Give the formula for income elasticity of demand (YED) and interpret its signs.

    $$YED = \frac{\% \Delta Q_d}{\% \Delta Y}$$ $YED>0$: normal good; $YED<0$: inferior good; $YED>1$: luxury (income-elastic); $0<YED<1$: necessity.

15. Give the formula for cross elasticity of demand (XED) and interpret its sign.

    $$XED = \frac{\% \Delta Q_d \text{ of good A}}{\% \Delta P \text{ of good B}}$$ Positive XED indicates substitutes; negative XED indicates complements; near zero indicates unrelated goods.

16. Give the formula for price elasticity of supply (PES) and state what makes supply more elastic.

    $$PES = \frac{\% \Delta Q_s}{\% \Delta P}$$ Supply is more elastic with spare capacity, easy stockholding, mobile factors, and a longer time period.

17. Name the factors affecting PED.

    Number/closeness of substitutes, proportion of income spent on the good, necessity vs luxury, whether it is habit-forming/addictive, and time period.

18. Define market failure.

    Market failure occurs when the free market, left alone, fails to allocate resources efficiently, leading to a net welfare loss (allocative inefficiency).

19. Distinguish a negative externality of production from a positive externality of consumption.

    A negative externality of production imposes external costs on third parties (e.g. factory pollution), so social cost exceeds private cost. A positive externality of consumption gives external benefits to third parties (e.g. vaccination), so social benefit exceeds private benefit.

20. What condition defines the socially optimal (allocatively efficient) level of output?

    Where marginal social benefit equals marginal social cost: $$MSB = MSC$$ Welfare is maximised at this point.

21. Define a public good and its two key characteristics.

    A public good is non-rival (one person's use does not reduce availability to others) and non-excludable (people cannot be prevented from consuming it). This causes the free-rider problem, e.g. national defence.

22. What is the free-rider problem?

    Because public goods are non-excludable, individuals can benefit without paying, so private firms cannot charge effectively and the good is under-provided or not provided at all by the market.

23. List the main forms of government intervention to correct market failure.

    Indirect taxes, subsidies, price controls (max/min prices), tradable pollution permits, regulation and legislation, provision of public goods, and information provision.

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