PDF Notes: AS and A Level Economics Hodder Education (4)

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    What is scarcity?

    A situation where resources are limited while wants are unlimited.

    What defines opportunity cost?

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

    How do microeconomics and macroeconomics differ?

    Microeconomics focuses on individual agents, while macroeconomics looks at the economy as a whole.

    What is the marginal principle?

    Decision-making based on small changes from the current situation.

    What are the three key questions of economics?

    What to produce, how to produce, and for whom to produce.

    How does equity differ from equality?

    Equity involves fair treatment, while equality means everyone receives the same.

    What is the role of government in resource allocation?

    To influence how resources are distributed among different groups in society.

    What is absolute poverty?

    A condition where individuals lack basic necessities for survival.

    What is relative poverty?

    A condition where individuals earn significantly less than the average income in their society.

    What is the headcount ratio?

    A measure of the percentage of a population living below a specified poverty line.

    What is the International Poverty Line?

    An agreed measure defining absolute poverty, set at PPP$1.90.

    What is persistent poverty?

    When a household is in relative income poverty for at least two of the last three years.

    What happens if benefit levels are too high?

    It may create a poverty trap, reducing the incentive to work.

    What is the difference between direct and indirect taxation?

    Direct taxation is levied on income, while indirect taxation is applied to goods and services.

    What is the significance of the time period in economics?

    Economic conditions can change over short and long time frames, affecting decision-making.