BOOK
Edexcel AS/A Level Economics (Edexcel AS/A Level Economics 2015)
(2016)
Additional Information
Book Details
Abstract
Edexcel AS/A Level Economics Student Book
Table of Contents
| Section Title | Page | Action | Price |
|---|---|---|---|
| Cover | Cover | ||
| Contents | iii | ||
| How to use this book | iv | ||
| Introduction AS/A level Economics | vi | ||
| Acknowledgements | vii | ||
| Theme 1: Introduction to markets and market failure | 2 | ||
| Chapter 1: Economics as a social science | 2 | ||
| The scientific method | 2 | ||
| Economics - the science | 2 | ||
| Theories and models | 2 | ||
| The purpose of modelling | 3 | ||
| Simplification | 3 | ||
| Assumptions and ceteris paribus | 3 | ||
| Positive and normative economics | 3 | ||
| Thinking like an economist: The Scottish Independence vote | 4 | ||
| Data Response Question: Net migration | 5 | ||
| Chapter 2: Economic data | 6 | ||
| The collection and reliability of data | 6 | ||
| Real and nominal values | 7 | ||
| Indices | 8 | ||
| The interpretation of data | 8 | ||
| Thinking like an economist: Spending on tourism | 10 | ||
| Data Response Question: Cinema data | 11 | ||
| Chapter 3: The economic problem | 12 | ||
| Scarcity | 12 | ||
| Infinite wants | 12 | ||
| The basic economic problem | 13 | ||
| What is an economy? | 13 | ||
| Economic resources | 13 | ||
| Thinking like an economist: The opportunity costs of going to university | 15 | ||
| Data Response Question: The National Health Service faces tough choices | 16 | ||
| Chapter 4: Production possibility frontiers | 17 | ||
| The problem of scarcity | 17 | ||
| Opportunity cost | 17 | ||
| Economic growth or decline | 18 | ||
| Consumption vs investment | 18 | ||
| Efficiency | 19 | ||
| Choice | 19 | ||
| Thinking like an economist: Water shortages | 20 | ||
| Data Response Question | 21 | ||
| Civil war in Syria | 21 | ||
| China | 21 | ||
| Replacing Trident | 21 | ||
| Chapter 5: Specialisation and the division of labour | 22 | ||
| Specialisation | 22 | ||
| Sectors of the economy | 23 | ||
| Markets | 23 | ||
| Money and exchange | 24 | ||
| The functions of money | 24 | ||
| Forms of money in a modern economy | 25 | ||
| Thinking like an economist: Slave labour and the supply chain | 26 | ||
| Data Response Question: Antler | 26 | ||
| Chapter 6: Types of economy | 27 | ||
| Economic systems | 27 | ||
| The allocation of resources | 27 | ||
| Types of economy | 28 | ||
| An evaluation of different types of economy | 28 | ||
| Smith, Hayek and Marx | 29 | ||
| Thinking like an economist: Mixed economies | 30 | ||
| Data Response Question: The US economy | 31 | ||
| Chapter 7: Rational decision making | 32 | ||
| Rational economic decision making | 32 | ||
| Maximisation | 32 | ||
| The margin | 33 | ||
| Thinking like an economist: Ryanair | 33 | ||
| Data Response Question: Private vs state schools | 34 | ||
| Chapter 8: Demand | 35 | ||
| Demand | 35 | ||
| Demand and price | 35 | ||
| Conditions of demand | 35 | ||
| Demand and income | 36 | ||
| The price of other goods | 36 | ||
| Other factors | 38 | ||
| The law of diminishing marginal utility | 38 | ||
| Consumer surplus | 38 | ||
| Thinking like an economist: The demand for housing | 40 | ||
| Data Response Question: Booming demand leads to higher milk prices | 41 | ||
| Chapter 9: Price elasticity of demand | 42 | ||
| The meaning of demand elasticity | 42 | ||
| Price elasticity of demand | 42 | ||
| Alternative formulae | 42 | ||
| Elastic and inelastic demand | 43 | ||
| Graphical representations | 44 | ||
| Two technical points | 45 | ||
| The determinants of price elasticity of demand | 45 | ||
| Price elasticity of demand and total revenue/expenditure | 46 | ||
| Thinking like an economist | 47 | ||
| The demand for housing | 47 | ||
| Price elasticity of demand for oil | 48 | ||
| Short-term and long-term price elasticities | 48 | ||
| Data Response Question: Fatty food clampdown | 49 | ||
| Chapter 10: Income and cross elasticities | 50 | ||
| Income elasticity of demand | 50 | ||
| Normal and inferior goods | 51 | ||
| Inferior goods and income elasticity | 51 | ||
| Necessities and luxuries | 51 | ||
| Cross elasticity of demand | 52 | ||
| Substitutes and complements | 52 | ||
| Thinking like an economist: Food substitutes | 53 | ||
| Data Response Question: Clothing, footwear and transport | 54 | ||
| Chapter 11: Supply | 56 | ||
| Supply | 56 | ||
| Supply and price | 56 | ||
| Conditions of supply | 57 | ||
| Costs of production | 57 | ||
| Technology | 57 | ||
| The prices of other goods | 58 | ||
| Other factors | 58 | ||
| Producer surplus | 58 | ||
| Price elasticity of supply | 58 | ||
| Determinants of elasticity of supply | 59 | ||
| The short run and the long run | 60 | ||
| Thinking like an economist | 60 | ||
| The supply of new housing | 60 | ||
| Factors affecting the supply of new private housing | 60 | ||
| Data Response Question: Salmon prices on the rise | 62 | ||
| Chapter 12: Price determination | 63 | ||
| Equilibrium price | 63 | ||
| Changes in demand and supply | 63 | ||
| Do markets clear? | 65 | ||
| Consumer and producer surplus | 66 | ||
| Points to note | 67 | ||
| Thinking like an economist: The price of gas | 68 | ||
| Data Response Question: Cocoa bean prices | 69 | ||
| Chapter 13: The price mechanism | 70 | ||
| The price mechanism | 70 | ||
| The rationing function | 70 | ||
| The signalling function | 70 | ||
| Incentive | 70 | ||
| Thinking like an economist: Motor cars | 71 | ||
| Data Response Question: Organic farming in decline | 72 | ||
| Chapter 14: Indirect taxes and subsidies | 73 | ||
| Indirect taxes and subsidies | 73 | ||
| The incidence of tax | 74 | ||
| Tax revenues | 74 | ||
| Ad valorem taxes | 74 | ||
| Subsidies | 74 | ||
| Taxes and elasticity | 75 | ||
| Subsidies and elasticity | 76 | ||
| Thinking like an economist: The French film industry | 77 | ||
| Data Response Question | 78 | ||
| Alcohol | 78 | ||
| 2014 Budget measures | 78 | ||
| Chapter 15: Alternative views of consumer behaviour | 79 | ||
| Rationality vs behavioural economics | 79 | ||
| Reasons why consumers may not behave rationally | 79 | ||
| Thinking like an economist: Payday loans | 80 | ||
| Data Response Question | 80 | ||
| Microfinance initiative | 80 | ||
| Peso loans | 80 | ||
| Tesco | 80 | ||
| Chapter 16: Types of market failure | 81 | ||
| Market failure | 81 | ||
| Externalities | 81 | ||
| Under-provision of public goods | 81 | ||
| Information gaps | 81 | ||
| Thinking like an economist: Road congestion | 82 | ||
| Data Response Question: Heathrow expansion | 82 | ||
| Chapter 17: Externalities | 83 | ||
| Private and social costs and benefits | 83 | ||
| Externalities of production and consumption | 83 | ||
| Market failure | 84 | ||
| Marginal costs and benefits | 84 | ||
| Welfare losses with production externalities | 84 | ||
| Welfare losses with consumption externalities | 86 | ||
| Thinking like an economist: Mosquito nets | 87 | ||
| Data Response Question: Sugar | 88 | ||
| Chapter 18: Public goods | 89 | ||
| Public goods | 89 | ||
| The free rider problem | 89 | ||
| Thinking like an economist: Lighthouses | 90 | ||
| Data Response Question: Television viewing | 91 | ||
| Chapter 19: Information gaps | 92 | ||
| Imperfect market information | 92 | ||
| The market for second-hand cars | 92 | ||
| Market examples | 93 | ||
| Thinking like an economist: Payment protection insurance (PPI) | 94 | ||
| Data Response Question: Smoking | 95 | ||
| Chapter 20: Government intervention in markets | 96 | ||
| Government intervention to correct market failure | 96 | ||
| Indirect taxes | 96 | ||
| Subsidies | 97 | ||
| Maximum prices | 98 | ||
| Minimum prices | 98 | ||
| Regulation | 99 | ||
| Trade pollution permits | 99 | ||
| State provision of public goods | 100 | ||
| Provision of information | 100 | ||
| Thinking like an economist: China’s pollution problems | 101 | ||
| Data Response Question: Carbon dioxide emissions from motor vehicles | 101 | ||
| Chapter 21: Government failure | 102 | ||
| Government failure | 102 | ||
| Distortion of price signals | 102 | ||
| Unintended consequences | 102 | ||
| Excessive administrative costs | 102 | ||
| Information gaps | 102 | ||
| Conflicting objectives | 103 | ||
| Politicians maximising their own welfare | 103 | ||
| Market vs government failure | 103 | ||
| Thinking like an economist: Venezuela in crisis | 104 | ||
| Data Response Question: Government failure | 105 | ||
| Theme 2: The UK economy - performance and policies | 106 | ||
| Chapter 22: Measures of economic performance | 106 | ||
| Microeconomics and macroeconomics | 106 | ||
| National economic performance | 106 | ||
| Economic growth | 106 | ||
| Unemployment | 106 | ||
| Inflation | 107 | ||
| The current balance | 107 | ||
| Thinking like an economist: The Irish economy | 107 | ||
| Data Response Question: Spain 2001-2014 | 108 | ||
| Chapter 23: The characteristics of aggregate demand | 109 | ||
| Aggregate demand | 109 | ||
| The aggregate demand curve | 109 | ||
| Shifts in the AD curve | 110 | ||
| Important notes | 111 | ||
| Thinking like an economist: Aggregate demand | 112 | ||
| Data Response Question: Optimism rises for the Spanish economy | 113 | ||
| Chapter 24: Consumption | 114 | ||
| Defining consumption and saving | 114 | ||
| Consumption and income | 114 | ||
| Other determinants of consumption | 114 | ||
| The determinants of saving | 116 | ||
| Thinking like an economist: Determinants of UK consumption | 117 | ||
| Data Response Question: Consumption | 118 | ||
| Chapter 25: Investment | 119 | ||
| A definition of investment | 119 | ||
| The rate of interest | 119 | ||
| The rate of economic growth - the accelerator theory | 120 | ||
| Costs | 120 | ||
| Business expectations and confidence | 120 | ||
| The world economy | 120 | ||
| Access to credit | 120 | ||
| Retained profit | 120 | ||
| The infl uence of government and regulations | 121 | ||
| Thinking like an economist | 121 | ||
| Investment in the UK | 121 | ||
| The determinants of investment | 122 | ||
| Data Response Question: Little appetite for investment | 123 | ||
| Chapter 26: Government expenditure and net trade | 124 | ||
| Reasons for government spending | 124 | ||
| Exports and imports | 124 | ||
| Thinking like an economist: French cuts in government spending | 125 | ||
| Data Response Question: UK trade deficits | 126 | ||
| Chapter 27: Aggregate supply | 127 | ||
| The short-run aggregate supply curve | 127 | ||
| Shifts in the short-run aggregate supply curve | 128 | ||
| The long-run aggregate supply curve | 129 | ||
| Shifts in the long-run aggregate supply curve | 130 | ||
| The classical and Keynesian long-run aggregate supply curves | 131 | ||
| Thinking like an economist | 132 | ||
| The case of oil | 132 | ||
| The impact on the short-run aggregate supply curve | 133 | ||
| The impact on the long-run aggregate supply curve | 133 | ||
| Data Response Question: Aggregate supply 2007-2013 | 134 | ||
| Chapter 28: National income | 135 | ||
| Income, output and expenditure | 135 | ||
| Injections and withdrawals | 136 | ||
| Thinking like an economist: Increasing investment | 137 | ||
| Data Response Question: Circular flow of income | 137 | ||
| Chapter 29: Equilibrium levels of real national output | 138 | ||
| Equilibrium output in the short run | 138 | ||
| Equilibrium output in the long run | 139 | ||
| A rise in aggregate demand | 140 | ||
| A rise in long-run aggregate supply | 142 | ||
| Increasing aggregate demand and supply | 143 | ||
| Thinking like an economist: Demand and supply side shocks in four recessions | 144 | ||
| Data Response Question: The UK economy: stagnation 2010-13 | 146 | ||
| Chapter 30: The multiplier | 147 | ||
| The multiplier | 147 | ||
| Calculating the multiplier | 148 | ||
| The multiplier effect and injections | 148 | ||
| The multiplier effect and withdrawals | 148 | ||
| The multiplier and the aggregate demand curve | 149 | ||
| Effects of the economy on the multiplier | 149 | ||
| Thinking like an economist: IMF encourages investment in infrastructure | 150 | ||
| Data Response Question: The multiplier | 151 | ||
| Chapter 31: Economic growth | 152 | ||
| Measures of national income | 152 | ||
| Real or volume vs nominal or value | 153 | ||
| Total and per capita | 153 | ||
| Transfer payments | 153 | ||
| Why is national income measured? | 153 | ||
| The accuracy of national income statistics | 154 | ||
| Comparing national income over time | 154 | ||
| Comparing national income between countries | 155 | ||
| Purchasing power parities | 156 | ||
| Income and wealth | 156 | ||
| National income, economic welfare and happiness | 156 | ||
| Thinking like an economist: UK National Well-being programme | 157 | ||
| Data Response Question: Living standards | 158 | ||
| Chapter 32: Causes of economic growth and the trade cycle | 160 | ||
| Economic growth | 160 | ||
| The trade cycle | 160 | ||
| Two types of trade cycle | 161 | ||
| Causes of the trade cycle | 161 | ||
| The output gap | 162 | ||
| Hysteresis | 163 | ||
| The production possibility frontier | 163 | ||
| The causes of long-run economic growth | 164 | ||
| Land | 164 | ||
| Labour | 164 | ||
| Capital | 165 | ||
| Technological progress | 165 | ||
| Efficiency | 165 | ||
| Aggregate demand | 166 | ||
| Four distinctions | 166 | ||
| Thinking like an economist: Economic growth in the UK economy | 167 | ||
| Data Response Question: Poland, Portugal and the eurozone | 169 | ||
| Chapter 33: The impact of economic growth | 170 | ||
| Economic growth | 170 | ||
| The benefits of economic growth | 171 | ||
| Growth is unsustainable | 171 | ||
| Increasing inequalities | 171 | ||
| Growth and happiness | 172 | ||
| The anti-growth lobby | 172 | ||
| The impact of economic growth | 172 | ||
| Thinking like an economist: The standard of living in the UK since 1900 | 173 | ||
| Data Response Question: Comparative living standards in the UK | 174 | ||
| Chapter 34: Inflation | 175 | ||
| Inflation, deflation and disinflation | 175 | ||
| Measuring inflation | 175 | ||
| The accuracy of price indices | 176 | ||
| The causes of inflation | 177 | ||
| The costs of high inflation | 178 | ||
| The costs of deflation | 179 | ||
| The benefits of low inflation | 179 | ||
| Thinking like an economist: The Retail Prices Index and Consumer Prices Index | 180 | ||
| Data Response Question | 182 | ||
| Inflation in Brazil | 182 | ||
| Deflation in Spain | 182 | ||
| Chapter 35: Employment and unemployment | 183 | ||
| Definitions | 183 | ||
| Causes of unemployment | 184 | ||
| Using diagrams to illustrate unemployment | 185 | ||
| Employment, unemployment and activity rates | 186 | ||
| Migration | 186 | ||
| Skills | 187 | ||
| The costs of unemployment | 187 | ||
| Thinking like an economist: Measuring unemployment | 189 | ||
| Data Response Question: Unemployment rates | 190 | ||
| Chapter 36: Balance of payments | 191 | ||
| The interconnectedness of economies | 191 | ||
| The balance of payments account | 191 | ||
| The current account | 191 | ||
| Current account imbalances and macroeconomic objectives | 192 | ||
| Government deficits and balance of payments deficits | 192 | ||
| Thinking like an economist | 193 | ||
| The parts of the current account | 193 | ||
| The current account over time | 194 | ||
| The size of the current account balances | 194 | ||
| Data Response Question: UK exports | 195 | ||
| Chapter 37: Possible macroeconomic objectives | 196 | ||
| Government objectives | 196 | ||
| Economic growth | 196 | ||
| Unemployment and employment | 196 | ||
| Inflation and deflation | 196 | ||
| The balance of payments on current account | 196 | ||
| Government budgets | 197 | ||
| The environment | 197 | ||
| Income distribution | 197 | ||
| Thinking like an economist: A tale of four economies | 197 | ||
| Data Response Question: Missed objectives | 199 | ||
| Chapter 38: Demand-side policies | 200 | ||
| Monetary and fiscal policies | 200 | ||
| Monetary policy | 200 | ||
| Interest rates as a monetary policy instrument | 200 | ||
| Quantitative easing | 201 | ||
| The role of the Bank of England | 202 | ||
| Fiscal policy | 202 | ||
| Direct and indirect taxes | 203 | ||
| Fiscal policy and aggregate demand | 203 | ||
| Monetary policy and aggregate demand | 204 | ||
| Strengths and weaknesses of demand-side policies | 204 | ||
| Thinking like an economist: The Great Depression and the Global Financial Crisis | 206 | ||
| Data Response Question: Germany rejects spending increase | 209 | ||
| Chapter 39: Supply-side policies | 211 | ||
| Supply-side policies | 211 | ||
| Market based and interventionist approaches | 212 | ||
| Increasing incentives | 212 | ||
| Promoting competition | 213 | ||
| Reforming the labour market | 214 | ||
| Improving the skills and quality of the labour force | 215 | ||
| Improving infrastructure | 216 | ||
| Encouraging the growth of small and medium-sized businesses | 216 | ||
| Strengths and weaknesses of supply-side policies | 217 | ||
| Thinking like an economist: North east England | 219 | ||
| Data Response Question: Boosting engineering skills and research | 220 | ||
| Chapter 40: Conflicts and trade-offs | 221 | ||
| Macroeconomic objectives | 221 | ||
| A successful sustainable economy | 221 | ||
| Conflicts between macroeconomic objectives | 221 | ||
| The short-run Phillips curve | 222 | ||
| Conflicts and trade-offs between economic policies | 223 | ||
| Thinking like an economist: UK policy conflicts 2010-14 | 224 | ||
| Data Response Question: Bank of England’s inflation target | 225 | ||
| Theme 3: Business behaviour and the labour market | 226 | ||
| Chapter 41: Business growth | 226 | ||
| The size of firms | 226 | ||
| The divorce of ownership from control | 227 | ||
| Public sector and private sector organisations | 227 | ||
| How businesses grow | 228 | ||
| Reasons for growth | 228 | ||
| Advantages and disadvantages of different types of growth | 229 | ||
| Constraints on business growth | 230 | ||
| Reasons for demergers | 231 | ||
| Impact of demergers | 231 | ||
| Thinking like an economist: Primark’s expansion into the US market | 232 | ||
| Data Response Question: Celgene | 233 | ||
| Chapter 42: Revenue | 234 | ||
| Total, average and marginal revenues | 234 | ||
| Revenue curves | 234 | ||
| Revenue and price elasticity | 236 | ||
| Thinking like an economist: Revenue maximisation | 236 | ||
| Data Response Question: Finchfield Cycles | 237 | ||
| Chapter 43: Production | 238 | ||
| The short run and long run | 238 | ||
| The short run: diminishing returns | 238 | ||
| Total, average and marginal products | 238 | ||
| The long run: returns to scale | 239 | ||
| Thinking like an economist: Increasing returns at petrol stations | 240 | ||
| Data Response Question: Overfishing | 241 | ||
| Chapter 44: Costs | 242 | ||
| The economic definition of cost | 242 | ||
| Fixed and variable costs | 242 | ||
| Total, average and marginal cost | 243 | ||
| Diminishing returns and short-run costs | 244 | ||
| Short-run cost schedules | 244 | ||
| Short-run cost curves | 244 | ||
| Points to note | 245 | ||
| Economies of scale and long-run average cost | 246 | ||
| The optimum level of production | 247 | ||
| Sources of economies of scale | 247 | ||
| Diseconomies of scale | 248 | ||
| Movements along and shifts in the long-run average cost curve | 248 | ||
| The relationship between the short-run average cost curve and the long-run average cost curve | 249 | ||
| Thinking like an economist: Cost in the shipping industry | 250 | ||
| Data Response Question: Ocado vs the rest | 251 | ||
| Chapter 45: Profit | 252 | ||
| Profit | 252 | ||
| Normal and abnormal profit | 252 | ||
| Profit maximisation: the MC = MR rule | 253 | ||
| Cost and revenue curves | 253 | ||
| Shifts in cost and revenue curves | 254 | ||
| Shut down points in the short and long runs | 254 | ||
| Thinking like an economist: Difficult times for European car manufacturers | 256 | ||
| Data Response Question: The European steel industry | 257 | ||
| Chapter 46: Market structure | 258 | ||
| Market structure | 258 | ||
| The number of firms in an industry | 258 | ||
| Barriers to entry | 259 | ||
| Barriers to exit | 260 | ||
| Product homogeneity and branding | 260 | ||
| Knowledge | 261 | ||
| Interrelationships within markets | 261 | ||
| Competition and market structure | 261 | ||
| Thinking like an economist: Industry and concentration ratios | 262 | ||
| Data Response Question: Eurostar | 264 | ||
| Chapter 47: Perfect competition | 265 | ||
| Assumptions | 265 | ||
| Demand and revenue | 266 | ||
| Cost and supply curves | 267 | ||
| Short-run equilibrium | 267 | ||
| Long-run equilibrium | 268 | ||
| Long-run cost curves | 269 | ||
| Thinking like an economist: The uranium market | 270 | ||
| Data Response Question: Coal | 271 | ||
| Chapter 48: Monopolistic competition | 272 | ||
| Imperfect competition | 272 | ||
| Assumptions | 272 | ||
| The downward sloping demand curve | 272 | ||
| Short-run equilibrium | 273 | ||
| Long-run equilibrium | 273 | ||
| Thinking like an economist: Tattoo parlours | 274 | ||
| Data Response Question: The decline of the pub | 275 | ||
| Chapter 49: Oligopoly | 276 | ||
| The importance of oligopoly | 276 | ||
| Market structure | 276 | ||
| Collusion | 276 | ||
| Game theory and collusion | 278 | ||
| Types of price competition | 279 | ||
| Types of non-price competition | 279 | ||
| Thinking like an economist: The UK new car market | 281 | ||
| Data Response Question: Broadcast football | 282 | ||
| Chapter 50: Monopoly | 283 | ||
| Assumptions | 283 | ||
| Sources of monopoly power | 283 | ||
| Revenue curves | 284 | ||
| Equilibrium output | 284 | ||
| Discriminating monopoly | 285 | ||
| Costs and benefits for producers and consumers from price discrimination | 287 | ||
| Four technical points | 287 | ||
| Thinking like an economist: Virgin Wolverhampton to London | 288 | ||
| Data Response Question: Motorway service stations | 289 | ||
| Chapter 51: Monopsony | 290 | ||
| Monopsony | 290 | ||
| Equilibrium price and output under monopsony | 290 | ||
| Costs and benefits | 291 | ||
| Bilateral monopoly | 291 | ||
| Monopsony power | 291 | ||
| Thinking like an economist: Monopsony market power | 292 | ||
| Data Response Question: Suppliers’ fees | 292 | ||
| Chapter 52: Contestability | 293 | ||
| Contestable market theory vs neo-classical theory | 293 | ||
| Assumptions | 293 | ||
| Normal and abnormal profit | 293 | ||
| Entry to and exit from the industry | 293 | ||
| Potential competition | 294 | ||
| Degrees of contestability | 294 | ||
| Thinking like an economist: The air passenger market | 295 | ||
| Data Response Question: The bus market | 296 | ||
| Chapter 53: Business objectives | 297 | ||
| Control | 297 | ||
| Short-run profit maximisation | 298 | ||
| Long-run profit maximisation | 298 | ||
| Divorce of ownership from control | 298 | ||
| Revenue maximisation | 299 | ||
| Sales maximisation | 300 | ||
| Thinking like an economist: What is the objective of a UK bank? | 300 | ||
| Data Response Question: Falling oil prices | 302 | ||
| Chapter 54: Efficiency | 303 | ||
| Efficiency | 303 | ||
| Static vs dynamic efficiency | 303 | ||
| Productive efficiency | 303 | ||
| X-inefficiency | 304 | ||
| Allocative efficiency | 304 | ||
| Dynamic efficiency | 306 | ||
| Efficiency and the production possibility frontier | 306 | ||
| Thinking like an economist: The misallocation of resources in transport | 307 | ||
| Data Response Question: Outsourcing | 308 | ||
| Chapter 55: Evaluating competition and monopoly | 309 | ||
| Competition | 309 | ||
| Perfect competition, contestable markets and static efficiency | 309 | ||
| Imperfect competition and static efficiency | 310 | ||
| Competition and dynamic efficiency | 310 | ||
| Evaluating competition | 311 | ||
| Monopoly | 312 | ||
| Natural monopoly | 313 | ||
| Multi-plant monopolists | 313 | ||
| Innovation | 314 | ||
| Evaluating monopoly | 315 | ||
| The theory of the second best | 316 | ||
| Thinking like an economist: Eating out | 317 | ||
| Data Response Question: King of the castle | 318 | ||
| Chapter 56: Government intervention and product markets | 320 | ||
| Controlling monopolies | 320 | ||
| Promoting competition and contestability | 324 | ||
| Government intervention to protect suppliers | 325 | ||
| Government intervention to protect employees | 325 | ||
| The effectiveness of government intervention | 325 | ||
| Thinking like an economist: UK and EU competition policy | 327 | ||
| Data Response Question: Controlling monopoly power | 329 | ||
| Chapter 57: Demand for labour | 330 | ||
| The downward sloping demand curve | 330 | ||
| The long-run demand for labour | 330 | ||
| The short-run demand for labour | 330 | ||
| The demand curve for labour | 331 | ||
| Shifts in the the demand curve for labour | 332 | ||
| Perfect and imperfect competition | 332 | ||
| Determinants of the elasticity of demand for labour | 332 | ||
| Thinking like an economist: Executive pay | 333 | ||
| Data Response Question: North Sea oil and gas workers | 334 | ||
| Chapter 58: Supply of labour | 335 | ||
| The supply curve for an individual worker | 335 | ||
| Income and substitution effects | 336 | ||
| Monetary and non-monetary considerations | 336 | ||
| Supply of labour to a firm | 337 | ||
| The supply curve of labour for an industry | 338 | ||
| Elasticity of supply of labour | 338 | ||
| Supply of labour to the economy | 338 | ||
| The mobility of labour | 339 | ||
| Thinking like an economist: The supply of labour in the UK | 340 | ||
| Data Response Question: Ethnic groups in the labour force | 344 | ||
| Inactivity | 344 | ||
| Characteristics of ethnic groups in employment | 345 | ||
| Chapter 59: Wage determination | 347 | ||
| How wage rates are determined | 347 | ||
| Elasticities of demand for and supply of labour | 348 | ||
| A labour market where all workers are paid the same | 348 | ||
| Why wage rates differ | 349 | ||
| Perfectly competitive labour markets | 350 | ||
| Imperfectly competitive labour markets | 350 | ||
| A monopoly buyer of labour | 350 | ||
| A monopoly seller of labour - trade unions | 351 | ||
| Bilateral monopoly | 351 | ||
| The power of trade unions | 352 | ||
| Efficiency | 352 | ||
| Thinking like an economist: Wage determination | 353 | ||
| Data Response Question: UK car manufacturing | 358 | ||
| Chapter 60: Government intervention in labour markets | 360 | ||
| Minimum wages/the living wage | 360 | ||
| Maximum wages | 361 | ||
| Public sector wage setting | 363 | ||
| Policies to tackle labour market immobility | 363 | ||
| Labour market issues | 363 | ||
| Thinking like an economist: The National Minimum Wage and the Living Wage | 366 | ||
| Data Response Question: Too many low skilled jobs? | 368 | ||
| Theme 4: A global perspective | 370 | ||
| Chapter 61: Globalisation | 370 | ||
| The characteristics of globalisation | 370 | ||
| The causes of globalisation | 371 | ||
| Impact on consumers | 372 | ||
| Impact on workers | 372 | ||
| Impact on producers | 373 | ||
| Impact on governments | 374 | ||
| Impact on the environment | 374 | ||
| Impact on individual countries | 375 | ||
| Non-economic impact of globalisation | 375 | ||
| The costs and benefits of globalisation | 375 | ||
| Thinking like an economist: The UK and globalisation | 376 | ||
| Data Response Question: China | 377 | ||
| Chapter 62: Specialisation and trade | 378 | ||
| Reasons for international trade | 378 | ||
| Patterns of trade | 378 | ||
| Absolute advantage | 379 | ||
| Comparative advantage | 379 | ||
| The assumptions of the theory of comparative advantage | 380 | ||
| The terms of trade | 381 | ||
| Why comparative advantage exists | 381 | ||
| Non-price theories of trade | 382 | ||
| The benefits of trade | 382 | ||
| The costs of trade | 382 | ||
| Thinking like an economist: The pattern of UK trade | 383 | ||
| Data Response Question: Impact of economic sanctions on Russia | 386 | ||
| Chapter 63: The terms of trade | 387 | ||
| Calculating the terms of trade | 387 | ||
| Factors influencing the terms of trade | 387 | ||
| Effects of changes in the terms of trade on the balance of payments | 387 | ||
| Effects of changes in the terms of trade on the domestic economy | 388 | ||
| Thinking like an economist: Norway compared to the UK | 389 | ||
| Data Response Question: Deterioration in Australia’s terms of trade | 390 | ||
| Chapter 64: Trading blocs | 391 | ||
| Trading blocs | 391 | ||
| Advantages and disadvantages of trading blocs | 391 | ||
| Thinking like an economist: Trading blocs | 392 | ||
| Data Response Question: Regional trade agreements | 393 | ||
| Chapter 65: Common markets and monetary unions | 394 | ||
| A common market | 394 | ||
| Stages of economic integration | 395 | ||
| Trade creation and trade diversion | 395 | ||
| Free trade vs customs unions | 395 | ||
| Economies of scale | 396 | ||
| Competition | 396 | ||
| Transfers of resources | 396 | ||
| Monetary unions | 397 | ||
| The European Central Bank (ECB) | 397 | ||
| Fiscal policy rules | 397 | ||
| The advantages of monetary union for eurozone countries | 398 | ||
| The disadvantages of monetary union for eurozone countries | 398 | ||
| Conditions necessary for the success of a monetary union | 399 | ||
| Thinking like an economist: Advantages and disadvantages of Britain’s membership of the EU | 400 | ||
| Data Response Question: Should Britain leave the EU? | 401 | ||
| Chapter 66: The World Trade Organization | 403 | ||
| World trade and GATT | 403 | ||
| World Trade Organization | 403 | ||
| The Doha Round | 404 | ||
| Multilateral vs regional trade agreements | 404 | ||
| Criticisms of the World Trade Organization | 404 | ||
| Thinking like an economist: The Bali Agreement | 405 | ||
| Data Response Question: Trade disputes at the WTO | 406 | ||
| Chapter 67: Restrictions on free trade | 407 | ||
| Restrictions on free trade | 407 | ||
| Tariffs | 407 | ||
| Quotas | 408 | ||
| Subsidies | 408 | ||
| Administrative barriers | 409 | ||
| Exchange rate manipulation | 409 | ||
| Reasons for restrictions on trade | 409 | ||
| Impact of protectionist policies | 411 | ||
| Free trade vs protectionism | 411 | ||
| Thinking like an economist: Australian car industry | 412 | ||
| Data Response Question: Shoe and textile tariffs | 413 | ||
| Chapter 68: Balance of payments issues | 414 | ||
| Components of the balance of payments | 414 | ||
| Reasons for international capital flows | 415 | ||
| Advantages and disadvantages of international capital flows | 415 | ||
| Causes of surpluses and deficits on the current account | 415 | ||
| Measures to reduce imbalances on the current account | 416 | ||
| Global trade imbalances | 418 | ||
| Financial crises | 419 | ||
| Default | 419 | ||
| Correcting imbalances | 419 | ||
| Thinking like an economist: The problem of the UK current account balance | 420 | ||
| Data Response Question: France: a deteriorating current account position | 422 | ||
| Chapter 69: Exchange rate systems | 423 | ||
| The exchange rate | 423 | ||
| Equilibrium exchange rates | 424 | ||
| Shifts in the demand and supply curves for a currency | 424 | ||
| Speculative activity | 425 | ||
| The purchasing power parity theory of exchange rates | 425 | ||
| Floating exchange rate system | 426 | ||
| Fixed exchange rate systems | 426 | ||
| Managed exchange rate systems | 427 | ||
| Influencing the exchange rate under a managed exchange rate system | 428 | ||
| The advantages and disadvantages of different exchange rate systems | 429 | ||
| Thinking like an economist: The Bretton Woods system | 431 | ||
| Data Response Question: The Swiss franc and the Danish krone | 432 | ||
| Chapter 70: The impact of changes in exchange rates | 434 | ||
| Exports and imports | 434 | ||
| The effects of a fall in the value of the exchange rate | 434 | ||
| Devaluation and elasticity | 434 | ||
| Devaluation and pricing strategies | 435 | ||
| Problems associated with devaluation | 435 | ||
| Inflation, growth and unemployment | 436 | ||
| Foreign direct investment | 437 | ||
| Thinking like an economist: A missing J curve? | 437 | ||
| Data Response Question: Appreciation of the pound, 1996-2001 | 439 | ||
| Chapter 71: International competitiveness | 441 | ||
| Competitiveness | 441 | ||
| Measures of competitiveness | 441 | ||
| Factors influencing competitiveness | 441 | ||
| Benefits of being internationally competitive | 442 | ||
| Problems of sustaining international competitiveness | 443 | ||
| Government policy | 444 | ||
| Thinking like an economist: Finland | 444 | ||
| Data Response Question: Hourly labour costs in the UK | 446 | ||
| Chapter 72: Inequality and poverty | 447 | ||
| Resource allocation, equality and equity | 447 | ||
| The distribution of resources in a capitalist market economy | 447 | ||
| Causes of inequality in income | 447 | ||
| Causes of inequality in wealth for individuals | 448 | ||
| Measuring inequality | 449 | ||
| Absolute and relative poverty | 450 | ||
| The causes of poverty | 450 | ||
| The effects of poverty | 451 | ||
| Causes of changes in absolute and relative poverty | 451 | ||
| Horizontal and vertical equity | 451 | ||
| Thinking like an economist | 452 | ||
| Trends in the distribution of income | 452 | ||
| The distribution of wealth | 453 | ||
| Absolute and relative poverty | 454 | ||
| Data Response Question: Absolute and relative poverty | 454 | ||
| Chapter 73: Redistribution of income and wealth | 456 | ||
| The distribution of income and wealth | 456 | ||
| Government expenditure | 456 | ||
| Taxation | 457 | ||
| Other policies to reduce inequalities and poverty | 458 | ||
| The costs of redistribution: a free market perspective | 458 | ||
| Minimising the costs of redistribution | 459 | ||
| Thinking like an economist: Reducing inequalities in the UK | 460 | ||
| Data Response Question: Growth and inequality | 463 | ||
| Chapter 74: Measures of development | 465 | ||
| Classification of countries | 465 | ||
| Characteristics of developing countries | 466 | ||
| Growth vs development | 466 | ||
| Measures of economic development | 467 | ||
| Thinking like an economist: India and education | 469 | ||
| Data Response Question: Equatorial Guinea | 470 | ||
| Chapter 75: Factors influencing growth and development | 471 | ||
| Complexity | 471 | ||
| Political and institutional factors | 471 | ||
| Education and skills | 471 | ||
| Infrastructure | 472 | ||
| Technology | 472 | ||
| Absolute poverty | 472 | ||
| Income distribution | 472 | ||
| Access to credit and banking including microfinance | 472 | ||
| Demographic factors | 473 | ||
| International trade | 473 | ||
| Commodities | 473 | ||
| The savings gap, foreign aid and the Harrod-Domar model | 474 | ||
| Debt | 474 | ||
| Foreign direct investment (FDI) and portfolio capital flows | 476 | ||
| Remittances | 476 | ||
| Gender issues | 476 | ||
| The environment | 477 | ||
| Non-economic factors | 478 | ||
| Thinking like an economist: Millennium goals | 478 | ||
| Data Response Question: Millennium goals | 479 | ||
| Chapter 76: Strategies influencing growth and development | 480 | ||
| Different types of development strategy | 480 | ||
| Trade liberalisation vs protectionism | 480 | ||
| Government subsidies | 480 | ||
| Exchange rates | 481 | ||
| Infrastructure development | 482 | ||
| Developing a financial sector | 482 | ||
| Foreign Direct Investment (FDI) and joint ventures | 482 | ||
| Privatisation | 483 | ||
| Buffer stock schemes | 483 | ||
| The Lewis model | 484 | ||
| Development of primary industries | 485 | ||
| Tourism | 485 | ||
| Fair trade | 486 | ||
| Foreign aid | 486 | ||
| Debt relief | 487 | ||
| The role of international financial institutions and non-government organisations | 487 | ||
| Thinking like an economist: India vs China | 489 | ||
| Data Response Question: Development in India | 490 | ||
| Chapter 77: Financial markets | 492 | ||
| Financial markets | 492 | ||
| The role of financial markets | 492 | ||
| Different types of financial institutions | 493 | ||
| Different types of markets | 493 | ||
| Market failure | 494 | ||
| Thinking like an economist: Payday lenders | 497 | ||
| Data Response Question: Financial institutions and market failure | 498 | ||
| Chapter 78: Central banks and financial market regulation | 500 | ||
| Central banks | 500 | ||
| Acting as banker to the government | 500 | ||
| Acting as banker to other banks | 500 | ||
| Regulator of the financial system | 501 | ||
| Types of regulation | 501 | ||
| Thinking like an economist: Financial regulation | 503 | ||
| Data Response Question: Shadow banking | 505 | ||
| Chapter 79: Public expenditure | 506 | ||
| The reasons for public expenditure | 506 | ||
| Reasons for changing size and composition of public expenditure | 506 | ||
| Current and capital expenditure and transfer payments | 507 | ||
| Living standards and equality | 507 | ||
| Taxation | 508 | ||
| Crowding out | 508 | ||
| Productivity and growth | 510 | ||
| Thinking like an economist: Public expenditure | 510 | ||
| Data Response Question: Sweden | 513 | ||
| Chapter 80: Taxation | 515 | ||
| The reasons for taxation | 515 | ||
| Types of taxes | 515 | ||
| The canons of taxation | 515 | ||
| Incentives to work and tax revenues | 516 | ||
| Income distribution | 517 | ||
| Real output, the price level and employment | 517 | ||
| The trade balance | 518 | ||
| FDI flows | 518 | ||
| Thinking like an economist | 519 | ||
| The main taxes in the UK | 519 | ||
| Progressive, proportional and regressive taxes | 520 | ||
| Data Response Question: Flat tax | 522 | ||
| Chapter 81: Public sector finances | 524 | ||
| Fiscal surpluses and deficits and the National Debt | 524 | ||
| Cyclical and structural deficits | 524 | ||
| Current budget deficits, primary budget deficits and actual budget deficits | 526 | ||
| Factors influencing the size of fiscal deficits and surpluses and the National Debt in nominal terms | 526 | ||
| Factors affecting fiscal deficits and surpluses and the National Debt as a percentage of GDP | 527 | ||
| Implications for other variables of fiscal deficits and National Debts | 528 | ||
| Thinking like an economist: The UK fiscal balance and the National Debt | 530 | ||
| Data Response Question: The British economy after the coalition | 532 | ||
| Chapter 82: Macroeconomic policies in a global context | 533 | ||
| Fiscal policy | 533 | ||
| Demand management | 533 | ||
| Measures to reduce fiscal deficits | 534 | ||
| Measures to reduce the National Debt | 535 | ||
| Monetary policy | 535 | ||
| Exchange rate policies | 537 | ||
| Supply-side policies | 537 | ||
| Direct controls | 537 | ||
| Macroeconomic policies and external shocks | 538 | ||
| Measures to control global companies | 539 | ||
| Problems facing policy makers | 540 | ||
| Thinking like an economist: Economic growth in Greece | 541 | ||
| Data Response Question: Argentina | 543 | ||
| Preparing for your AS and A level exams | 544 | ||
| Index | 558 |