Final Foundation Text Book 2022 Economics

Foundation Level Economics
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DO NOT PRINT THIS PAGE
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C.Pearman Productions
Published October 2022
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About
Foundation level economics course is the prelude to the GCSE

in Economics course. It is designed to introduce you to some of
the most commonly studied, and most influential aspects of
Economics, whilst engaging in real-world activities, to build a
solid foundation, ready to begin your studies in GCSE Economics
and beyond.
This book has been designed with students in mind,

incorporating easy to understand examples, not often seen in
the world of Economics, and a real understanding of the
contribution that women have had to this field, which has largely
gone unnoticed in economics texts.
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Assessment at Foundation level

You will be assessed on the level of understanding of economics within
essay writing and tests- MAPS (Mini assessment papers). By demonstrating
the level of knowledge, application, analysis and evaluation, throughout,
you will be assigned a foundation level. Although, this is not directly linked
to the equivalent levels at GCSE, on the opposite page you can track your
expected path at GCSE level.
Foundation Knowledge Application Analysis Evaluation

Level
Securing + FL9 Strong Strong Deepening Deepening
Securing FL8 Strong Strong Deepening Strong
Securing - FL7 Strong Strong Strong Strong
Developing + FL6 Strong Strong Good Good
Developing FL5 Good Good Reasonable Reasonable
Developing- Fl4 Good Good Reasonable Limited

/None
Emerging + FL3 Reasonable Reasonable Limited

/None
Limited
/None
Emerging FL2 Reasonable Limited /None Limited

/None
Limited
/None
Fail FL1 Limited /None Limited /None Limited

/None
Limited
/None
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Path to GCSE level
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Contents Page
Section1: Introduction to Economics

Section 2: How the markets work
Section 3: How the markets fail
Section 4: introduction to
Macroeconomics
Section 5: International Economics
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Section 1
Introduction to
Economics
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Section 1
Introduction to Economics
Section 1 RAG Grading
What is Economics? 1
Economics as a social science 1.1
The use of models 1.1
Rational behaviour 1.2
Utility* 1.3
Over to You 1.4
The Economic Problem 2

Opportunity Cost 2.1
Factors of Production 2.2
Over to You 2.3
Types of Economic Systems 3

Examples of Economic systems 3.1
Advantages and disadvantages 3.2
of economic systems
China in Focus 3.3
Industrial Sectors 3.4
Economy Structure* 3.5
Over to You 3.6
Economic Influencers 4
Ancient Greeks 4.1
Founding Fathers 4.2
The rise of the female economist 4.3
Over to you 4.4
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“The first lesson of economics is scarcity: there is

never enough of anything to fully satisfy all those
who want it. The first lesson of politics is to disregard
the first lesson of economics
Thomas Sowell
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Chapter 1
What is Economics?
Economics is a social science

concerned with the allocation
of scarce resources.
As a branch of science,
Economics studies individuals
and the relationship between
those individuals and the
societies around them.
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1.1 The use of Models

As with Science, economists use models to predict the outcome of
decisions, such as;
• Demand and supply models

• Elasticity calculations
• Government Policy models
• Exchange Rate models.
Let’s take a simple Science experiment; How fast will a sugar cube
dissolve when a different variable is changed:
Each time a variable is changed, all others are held constant:
E.g., Heat, Size of the sugar cube, amount of water, Instruments used to
stir.
The prediction: The sugar cube will dissolve faster when it is stirred OR
when the water is hotter.
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1.1 The use of Models

In Economics we would use a model to predict the impact of a
change in a factor of demand on the market for a particular good or
service.
For example, we would use a demand and supply model to predict

that a fall in income will decrease the demand for cars, this is because
people have less, money to spend, and will reduce demand in this
market. This will cause there to be a fall in demand faster than supply,
leading to a fall in price and quantity in the market.
In this case, we would hold

all other variables
constant, and just look at
the impact of income
alone and its impact on
the market,
HOWEVER:
Unlike the Science experiment, where all other variables CAN be held
constant, in reality the demand for cars will be influenced by many
other factors such as advertising, interest rates and the price of
substitutes, to name just a few. This means that, although in theory we
can hold all other variables constant, the outcome will depend on
human behaviour, which can change the outcome of the model.
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1.2 Rational Behaviour

In order for Economic models to
work, we need individuals to act
rationally according to the model,
which means that they maximise
their utility with the decisions they
make.
Utility means that the consumer will

make a decision where the
outcome will generate the most
benefit to them
However, that would mean we are all

robots, acting how we ought to all of
the time, which is just simply unrealistic!
This does mean that as economists, the

outcome of our predictions can be
incorrect, because we
cannot assume that all
individuals act ‘rationally’
according to the model all of the time.
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1.3: Advanced Content

A little bit more on utility and how we use it in Economics.
Marginal utility (MU) is defined as the additional utility (benefit)
gained from the consumption of one additional unit of a good or
service or the additional use that a person has for an additional unit.
How much utility

do you think you
would gain from
1 slice of pizza?
How much from

2?
What about 100

slices?
I think we can agree that the more pizza you consume, the less utility
or benefit you will gain from it. This means that the more a consumer
consumes of a product, the smaller value they will place on a
product, and therefore would be willing to pay a lower price. This
then generates the demand curve that we use in the study of
Economics
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1.4 Over to you
Disneyworld Florida celebrated its 50th anniversary in 2022 as well

as it being the first summer that people could travel to the USA
after Covid 19.
1. What will be the impact on the market for Disney land

holidays?
2. What do you predict will happen to price and quantity in the

market.
3. What other factors could occur that could change the

outcome of this prediction?
4. Use your understanding of Economics to explain why the

predictions used by models may not always occur.
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If decision making is a science, judgement is

an art
Harvard University
t er 2
Chap
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Chapter 2
How decisions are made
As we now know, economics is the study of how scarce resources

are allocated. In order for governments, individuals and firms to
decide the answers to the three fundamental questions; what to
produce, how to produce and for whom to produce? we must first
look at the problem that exists that underpins it all.
The Economic
Problem
This occurs
because there
are unlimited
wants but finite
resources,
meaning that
deciding on how
they are
allocated, will
then be a result of
key decisions.
In order to make decisions we use the concept of opportunity cost.
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Chapter 2.1 Opportunity Cost
Opportunity cost looks at

the benefit lost from the
next best alternative
forgone, when making a
decision.
For example, what did you have to give up in order to study

Economics?
If it was Geography, then the opportunity cost of your decision is

leaning about the physical world and the study of Geography
What would be the opportunity cost

of you;
Going to the cinema?
Or
Buying a new pair of boots?
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Chapter 2.2 Factors of

production
Governments have to make decisions all of the time, about how to

allocate finite resources of Land, labour, Capital as well as financial
capital. There is not an endless amount of these resources, but an
endless amount of demand for them.
Below, we look at these resources more closely
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Chapter 2.2 Factors of

production
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Chapter 2.3 Over to you
1. What would be the opportunity cost of the following government’s

decisions?
0 Spending more money on healthcare
0 Cutting Education funding
0 Raising taxes
2. Why is there an opportunity cost to these decisions?
3. How do the above examples demonstrate the economic

problem?
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“The Government’s view of the free market

could be summed up in a few short phrases: if it
moves, tax it. If it keeps moving, regulate it.
And if it stops moving, subsidise it”
Ronald Regan
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Chapter 3 Economic systems
In deciding to allocate resources, different governments, decide

to do this in very different ways, depending on whether they
intervene in the market heavily, or let the market allocate the
resources itself.
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Chapter 3.1 Examples of
Economic systems
Planned /command Transitioning
Economies Economies
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Chapter 3.1 Examples of
Economic systems
Mixed Free market

Economies Economies
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Chapter 3.2 Advantages and
Disadvantages of Free markets
1. An efficient allocation of scarce

resources – factor resources tend
to go where the expected profit
is highest. 1. Free market activity can lead to
2. Competitive prices for consumers a rise in the scale of income and
as suppliers look to increase and wealth inequality as shown by rise
then protect market share. in the Gini coefficient.
3. Competition drives innovation & 2. Businesses can develop
invention bringing higher profits monopoly power which leads to
for businesses and better higher prices and damage to
products for consumers. consumer welfare
4. The profit motive stimulates 3. Under or non-provision of pure
investment which encourages public goods (e.g., defence –
economies of scale and lower goods which are non-rival and
prices for consumers. non-excludable)
5. Competition through trade in 4. Under-provision of merit goods
goods and services helps to such as health and education –
reduce domestic monopoly which many cannot afford –
leading to lower social welfare
power and increases choice
5. Free markets may fail to address
negative externalities from
production and consumption –
unsustainable growth
6. Deregulated financial markets
often prone to bouts of instability –
the fallout from which affects
millions not directly involved.
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Chapter 3.2 Advantages and

Disadvantages of Planned
economies
1. Total equality
2. No private monopolies
3. Welfare of all citizens raised as all
essentials provided.
4. No demerit goods or negative
externalities.
5. No unemployment
6. No boom-and-bust economic 1. An inefficient allocation of scarce
cycles. resources – factor resources tend
to go where the expected profit
is highest.
2. High prices for consumers as
suppliers look to increase and
then protect market share.
3. No innovation & invention
bringing higher profits for
businesses and better products
for consumers.
4. Slow to react to changing
markets.
5. Lack of Competition through
trade in goods and services
means the government acts like
a monopoly, restricting choice
and consumer power.
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3.3 China in Focus
As a transition economy, China’s

economy has developed
tremendously over the last decade
GDP = Gross Domestic

product.
It is a measure we use for

economic growth.
Tra
nsit
sta ion
rte
d What is happening to
economic growth in china
since their transition in
1978?
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3.3 China in Focus
What are the links between the graphs above, China’s

transition and their economic growth?
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3.4 Types of Industries
As seen in China, many economies have developed their

industries, which has led to growth. There are four industrial sectors,
that combine factors of production, and are part of the decision-
making process for the allocation of resources that economies
have to make.
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3.5 Advanced
The four factors of
Planned
production are
Mixed
Type allocated in
Free
of different ways
Economy according to how
the economy is
organised.
Explore all of the

Public different areas
Private Sector listed
Primary
Secondary Industry
Tertiary
Competitive
Oligopolies Type of Market

Monopolies
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3.6 Over to you

Write an evaluative piece, detailing whether a free market economic
system is the best way to allocate resources.
You will be using the following skill levels in this piece.
Question: ________________________
Definition : ___________________________________
(1 mark)
Paragraph 1: Paragraph 2:
Advantages or it works Disadvantages, or its effect is
because….. limited by….
Point:
Apply to the market / graph
Explain the impact on the

focus group of your question
ie; firms, consumers,
Governments, markets or
economies
Final Judgement: it will work or be advantageous as long as…..
An evaluative piece requires you to discuss both sides of the

question, use the template below to help.
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“It is better to be roughly right than precisely

wrong
John Maynard Keynes
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Chapter 4 Economics
Influencers
As with Mathematics and the Sciences, Economics involves the

study of models created largely by white men. Although these
models are extremely important, so too are the contributions of a
vast number of female economists, from a very diverse range of
backgrounds.
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Chapter 4.1 The Ancient Greeks
Xenophon
He coined the word

Economics, taking the Greek
word ‘oikos’, meaning
household, with ‘nomos’
meaning rules
Plato
Was the first philosopher to

explain the importance of the
division of labour, and that every
human needed three basic
elements for survival; food,
clothing and shelter
Aristotle
As a student of Plato, he
believed that money’s sole
purpose was as a medium of
exchange.
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Chapter 4.1 The Ancient Greeks
Pythagoras
Economics and money itself, are based on Pythagoras’s idea that

all things can be reduced to a number, and in fact was responsible
for introducing the first coinage in his region.
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Chapter 4.2 Founding Fathers
John Maynard Keynes (1883-1946)
Is regarded as the founder of modern-

day macroeconomics. He believed
that the economy would not return
back to full employment instantly, and
that recessions were most probably
caused by a reduction in aggregate
demand.
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Adam Smith (1723-1790)
Smith established three laws of

economics;
1. Law f self interest

2. Law of Competition
3. Law of supply and demand-those
enough goods would be produced
at the lowest price to satisfy
demand.
He also created the theory of

the ‘invisible hand’, whereby
Price
the market mechanism will

De
ly
pp
ma
clear any excess in the

Su
n
market.
d
Equilibrium
P*
Q* Quantity
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David Riccardo (1772-1823)
Established the theory of

comparative advantage,
whereby a country will gain
the most from trade if the
produce a good with a lower
opportunity cost than another
country
Alfred Marshall (1842-1924)
In his work ‘The principle of

Economics’, Marshall described
how consumers would gain a
surplus above the price that they
actually pay for a good or
services. The theory of consumer
surplus was thus created.
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Chapter 4.3 The Rise of the

female economist
Dr Dambisa Moyo
Is a world leading economist and one of

the most influential people in the world,
as named by Forbes. She analyses
macroeconomy and international affairs
and proposes economic and social
solutions to some of the biggest issues
facing our global economy today
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female economist
Elinor Ostrom
Ostrom received the 2009 Nobel Prize in

Economic Sciences for her ground
breaking research demonstrating that
ordinary people are capable of
creating rules and institutions that allow
for the sustainable and equitable
management of shared resources.
Carmen Reinhart
Reinhart's areas of expertise are

in international finance, and
macroeconomics. Her work has helped
to inform the understanding of financial
crises in both advanced economies
and emerging markets. She has
published extensively on capital flows,
exchange rate policy, banking and
sovereign debt crises, and contagion
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. female economist
Joan Robinson
Robinson developed the concept of

monopsony, a kind of reversed
monopoly where instead of having one
seller and many buyers, there is one
buyer and many sellers. In labour
economics, this is an extremely
important idea. When the single buyer is
purchasing labour, and there are many
people wishing to sell their labour, the
theory suggests that they can exert large
influence over wages. It’s one of the
major arguments for minimum wages
Millicent Fawcett
Was a feminist campaigner who

committed to the political rather than
scientific application of economics that
developed in the coming decades.
The book was still published 40 years

later, when the 10th edition was
released.
Fawcett also blended her campaigning

work and her economics, proposing the
“crowding hypothesis” that women
were driven by informal and formal
institutions into lower-paid work.
Because all women were driven toward
this subset of jobs, Fawcett
hypothecated that the oversupply of
labour kept their wages down. The
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thesis is still discussed by feminist and
labour economists today

female economist
Esther Duflo
Is the youngest, and second only

woman and to receive the Nobel
prize for Economics. With her
husband, she created an
innovative approach to tackling
global poverty, by breaking it
down into smaller, more
manageable problems.
Janet Yellen
Is an American economist and

educator. As a member of President
Joe Biden’s Cabinet, Yellen is the first
woman to head the U.S. Treasury
Department and the Federal
Reserve. She is the first person in
history to head both of those groups
and the White House Council of
Economic Advisors.
Former President Barack Obama

called Yellen, “one of the nation’s
foremost economists and
policymakers” who is “renowned for
her sound judgment and ability to
build consensus
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4.4 Over to you
Choose one of the influential

female economists and
create an Instagram
template for her. Including:
Roles
Books
Quotes
History
Contribution to the field of

Economics
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Section 2
How markets
work
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Section 2
How prices are determined 5
Demand 5.1
Supply 5.2
Equilibrium 5.3
Over to You 5.4
Types of Markets 6
Competitive and Uncompetitive markets 6.1
Are monopolies always bad? 6.2
Are competitive markets always good? 6.3
Over to you 6.4
What Supermarkets do not want you to 7

know
The art of nudging 7.1
Nudging the 5 senses 7.2
Over to you 7.3
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“If you destroy a free market, you create a

black market.”
Winston Churchill
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5 How prices are determined

In the UK, we believe in the free market, with some government
intervention, (when that market fails.) So how does this market
work? How are prices determined, and what influences them?
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5.1 Demand
Demand is the amount consumers wish to purchase at a given
price, at a specific point in time.
Demand will
If Prices rise,
fall
If Prices fall Demand will

rise
We use a demand
curve to show this
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5.1 Demand
As well as price, there are a number of factors that will affect
demand, let’s take the market for Kylie cosmetics, and se the
impact of these factors on this market.
OPULATION Rises
DVERTISING Occurs
UBSTITUTE E.g., MAC makeup

PRICES rises
NCOME Rises
ASHIONS It becomes on
trend
NTEREST RATES Fall
OMPLEMENTARY Makeup brushes

GOOD PRICES
become cheaper
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5.2 Supply
Supply is the amount producers wish to produce at a given price, at
a specific point in time.
Supply will
If Prices rise,
rise
Supply will
If Prices fall
fall
We use a supply
curve to show this
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5.2 Supply
As well as price, there are a number of factors that will affect
supply, let’s take the market for bananas, and see the impact of
these factors on this market.
RODUCTIVITY Rises
NDIRECT Falls
TAXES
UMBER OF Rises (number of

FIRMS IN THE farmers)
MARKET
ECHNOLOGY Used to grow

bananas
Improves
SUBSIDIES Occurs
EATHER Has been better

for growing
bananas
OST OF become
PRODUCTION cheaper
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5.3 equilibrium
Prices in any market will be determined by the interaction of
demand and supply. Where they interest (cross) this is the price
that the market will set for that good or service.
We use a market or
equilibrium diagram
to show this.
If demand for a good rise (supply stays the same), there is lots of
people that want this good, and not enough supply, so prices will
rise, and supplies will supply more to meet the higher demand.
If supply of a good rises, (but demand stays the same) there is too
much supply, and not enough demand, meaning the price of the
good will fall, as suppliers try to get rid of the left-over products.
If demand for a good fall (but supply stays the same), there is not
enough people that want this good, and too much of the good left
over, so suppliers will reduce the price to get rid of it.
If supply of a good falls, (but demand stays the same) there is not
enough of the good to meet demand, so suppliers raise the price
to take advantage of this.
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5.4 Over to You

In each of the following cases, explain what happens to the
demand, supply, or market price of the I phone after each
scenario. (View the scenarios separately).
1. The impact on demand after a reduction in its selling price

from £300 to £150.
2. The impact on supply of a fall in the cost of glass used to make
I phones.
3. The impact on demand after Apple releases new TV
advertising.
4. The impact on demand of a fall in people’s income.
5. The impact on supply of a fall in the selling price of I phones.
6. The impact on supply of better technology used to make I
phones.
ADVANCED:
Can you explain why each of the above changes impacts the
market, and can you use a graph in your explanation?
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“Let’s not take ourselves too seriously, no one

has a monopoly on wisdom.”
Queen Elizabeth II
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Chapter 6: Competitive and

uncompetitive markets
Although changes in demand and supply will impact prices and

quantity in the market, how much they are affected will also be
impacted by the type of competition in the market.
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Chapter 6.1: Competitive and

Very Competitive Competitive

Markets Markets
Perfect Monopolistic
Competition Competition
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Uncompetitive No Competition
Markets
Oligopolies Monopolies
60

Competitive markets have lots of competition, it is very easy to set
up a business in this market, there is lots of choice for consumers,
and prices will be competitive and low.
E.g., Nail Salons, Online clothing stores and
hairdressers
Oligopolies are a type of uncompetitive market. They only have a

few large firms, they are difficult to set up in, as there are usually
very high costs or barriers such as customer loyalty to compete
with, and they will have less competitive prices than competition
markets.
E.g., Supermarkets, Petrol companies and
phone companies.
Monopolies are the least competitive of markets. In the purest

sense, there is only one dominant firm in the market, this is because
it is extremely difficult for any new firms to enter, many times due to
the extremely high costs involved. This makes them very inefficient
and slow to bring out new ideas, their prices will also be very high.
E.g., Google, Rail companies, British Gas.
61
Chapter 6.2: Are all

monopolies bad?
Although monopolies can be very detrimental to a market, it really
depends on whether they use their many advantages to benefit the
consumer and the wider market.
Large enough to create

deals to lower costs.
Large enough profits to

invest in greener
technology. Therefore, will a monopoly
use its power for good or
Large enough profits to
for evil?
create new ideas.
Creates growth for the

domestic country
No incentive to innovate
No incentive to keep
costs low
High Prices
Lack of choice for

consumers
62
Chapter 6.3: Are all

competitive markets good?
Although competitive markets can be beneficial to consumers,

firms being small can have some detrimental effects on the market.
Competition provides and

incentive to innovate
Incentivised to keep costs

low
Low Prices
Large choice for

consumers .
Too small to create deals

to lower costs.
Not enough profits to

invest in newer
technology.
Not enough profits to

create new ideas.
Are susceptible to failing,

especially when up
against global
monopolies
63
Chapter 6.4 Over to You
Write an evaluative piece about market structures using thee structure

below
Choose one of the following:
Competitive markets always benefit the consumer, because they will

ensure prices are low.
Monopolies are always detrimental to the consumer, because their

prices are always high.
Question: ________________________
Definition : ___________________________________
(1 mark)
Point:

economies
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“It isn’t the consumer’s job to know what they

want.”
Steve Jobs
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Chapter 7 What the

supermarkets do not want you
to know
Among the many strategies that supermarkets use, there are a

number of ‘nudges’ they use to make us by more. This involves
behavioural economics, a branch of economics that blends
psychology with economics.
Nudge theory suggest that consumer behaviour can be influenced

by small, positive reinforcements.
They can even save the Government money by reducing market

failure.
66
Chapter 7.1 The art of nudging
Do you want a desert with

that?
Employees in the fast-food

industry are trained to
‘upsell’ to get you to buy
more.
Choice architecture
This involves presenting

goods in a different light,
such as placing more
health products in a school
canteen
Default Options
By saying for example, that

people have to opt out
rather than opt into a
private pension, it ensures
that there are more people
with private pensions.
67
Chapter 7.1 The art of nudging
Product Placement
Have you ever noticed,

that when you visit a
supermarket, often the
essentials, such as bread
and eggs, are placed at
the back of the shop, they
do this, so that you travel
through the entire store,
and pick up other goods
on the way?
Sounds like a sale!
Supermarkets often use

smaller floor tiles in areas
of expensive items, this
creates an illusion of
clicking over the tiles
faster, so you then slow
down.
68
Chapter 7.2 nudging the senses
Sight
Supermarkets are a feast for the eyes, with

colourful foods and promotions as far as the eye
can see. Supermarkets place premium products at
eye level. Children’s cereal may be placed on low
shelves, at their eye level, leading to them using
‘pester power’ to get their parents to spend more.
Studies have shown that if you make eye contact
with a character on a cereal box you are more
likely to feel connected to the brand and prefer it
over other brands
The 5
Smell
Smell is strongly linked to memory, making it a

potent marketing tool. In supermarkets, smells
evoke pleasurable memories, which encourage
impulse buys. Smelling freshly baked bread in a
supermarket may trigger a memory of a bakery in
France – and next thing you know you've bought
six croissants.
69
Chapter 7.2 nudging the senses
Sound
The music playing in a supermarket

could affect your shopping habits.
Slow music encourages a person to
spend longer in supermarkets,
which means they buy more.
Music may also affect what you

buy. Studies have shown that when
classical music is playing in a wine
shop people buy more expensive
wine. They also find that French Touch
music leads to French wine
outselling German wine and vice Enabling customers to touch a product also
versa.
increases the valuation, or the amount they are
willing to pay for that product. Forty years of
research has shown that an object’s value
increases once a person has taken ownership of it
Senses – the endowment effect.
Taste
Everybody loves free food; research has shown

that 75% of people take free samples when
offered. Companies also love free samples; this is
because they can massively increase sales.
70
Create a plan to enable the canteen to increase their sales.

Research the art of nudging further, and create a power point,
including graphics, of what they could do using your knowledge of
behavioural economics.
71
Mid-Year Exams
72
Section 3
Market failure
73
Section 3
Impacts of Consumption 8
Demerit goods and negative externalities 8.1
Merit goods and positive externalities 8.2
Over to You 8.3
How the government intervenes in the 9

cigarette market
Government Policies 9.1
Policies are effective at reducing market 9.2
failure
Policies are ineffective at reducing market 9.3
failure
Over to you 9.4
The obesity epidemic 7

Market failure of consuming unhealthy food 7.1
Obesity epidemic 7.2
Government policies to tackle obesity 7.3
Over to you 7.4
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“If you’re in a system where you must make

.
profit to survive, you are compelled to ignore
externalities.”
Noam Chomsky
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75
Chapter 8 Impacts of
consumption
As we have already discussed, we believe in the allocation of
resources by the free market, but when that market fails, the
government will intervene. So how does the market fail?
76
Chapter 8.1 Demerit goods and
negative externalities
As individuals we may consume goods that are harmful to ourselves
or other people.
Types of Negative Consumption market failure:

Eating unhealthy food, smoking, taking drugs, alcohol, littering,
driving.
77
Chapter 8.1 Demerit goods and
negative externalities
Negative consumption Demerit goods, are goods that
externalities are the people tend to over consume, as
disadvantages imposed on a they are unaware of the
third party, when an individual detrimental impacts, they may
consumes a good. E.g.: have on themselves. E.g.:
• Tax rises to pay for services. • Inability to work

• Strain on the NHS • Heart disease
• Strain on Police services • Liver disease
• Strain on mental health • Lung cancer
services • Mental health deterioration
• Strain on family members • Risk of death
• Health impacts on • Risk of injury
someone else. • Risk of poverty
• Negative impacts on the
environment.
• Risk of death or injury to
someone else.
• Reduction in welfare for
someone else.
• Less labour force,
impacting economic
growth of a country
78
Chapter 8.2 Merit goods and

positive externalities
As individuals we may consume goods that are beneficial to
ourselves, but also can have positive impacts on other people.
Types of positive Consumption market failure;

Vaccinations, using green or public transport, education and training, healthy
foods, vitamins, recycling, creating a pleasing aesthetic
79
Chapter 8.2 Merit goods and

positive externalities
Merit goods, are goods that
Positive consumption externalities
people tend to under consume,
are the advantages imposed on
as they are unaware of the
a third party, when an individual
positive impacts, they may have
consumes a good. E.g.:
on themselves. E.g.:
• Tax cuts as the government

• Ability to be more
spends less money.
productive at work
• Less strain on the NHS
• Improvements in your own
Less strain on Police
health
services
• Better Mental health
Less strain on mental health
• Increase in earnings
services
• Reduction in poverty
• Less strain on family
• Better relationships
members
• Increase in welfare for
someone else.
• More productive labour
force.
• Economic Growth
• Positive health benefits for
someone else.
• Positive impacts on the
environment.
80
For each of the following, explain why market failure occurs, and which
type(s).
1. Passive Smoking
2. Driving without a license
3. Having a vaccination
4. Overconsumption of fast food
Advanced
Externalities occur when the private social costs and benefits, do

not equal marginal social costs and benefits, investigate this
concept further to explain the concept of negative externalities.
81
82
“In a consumer society there are inevitably two

kinds of prisoners: the prisoner of addiction and
the prisoner of envy.”
Ivan Illich
e r
pt
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C 9
83
Chapter 9 How the government

intervenes in the cigarette
market.
We have established now, that smoking is a demerit good, that has
harmful effects (negative externalities) on third parties. The free market
has failed to allocate this good efficiently, as on its own, without any
government intervention, consumption rates would be higher and prices
far lower. So, what interventions exist, and how effective are they?
84
Chapter 9.1 Government

policies in the market for
cigarettes
Excise Duty
This is an additional tax to VAT, designed
to increase the price of cigarettes.
Currently around 80% of the price of

cigarettes is made up of tax
Negative advertising
The government has banned any kind of
branding on cigarette packets, and
mandated that health warnings instead
are on packets
Age Limits
There is ban on selling cigarettes to under

18’s, and it is illegal to smoke under the
age of 16.
Ban on smoking in cars with

children
It is now illegal to smoke in cars with

young children.
85

policies in the market for
cigarettes
Ban on Advertising
Cigarettes companies are banned from

any sort of advertising on cigarettes, they
used to advertise on the side of formula 1
cars!
Education
The downsides of smoking are part of the

national curriculum, meaning that every
young person has access to information
on the health impacts of smoking
Ban on smoking in public places
You are now not allowed to smoke

indoors in public places, and designated
smoking zones have been created at
places such as theme parks.
Concealed packages
All shops must now lock away their

cigarettes, and not have them on display,
which reduces exposure to non-smokers.
86
Chapter Foundation
9.2 How Level Economics
good are these
policies at reducing market
failure?
Tax
Excise duties are an example of

an indirect tax, which are taxes
placed on goods and services.
This pushes the price of
cigarettes up, meaning they are
more expensive, so less people
can afford them. This reduces
demand for them, shown by a
movement along the demand
curve from B to A. The tax also
raises revenue for the
government, that they can then
put back into the health
service.
Advanced:
S2
An indirect tax will always shift
the supply curve, as the S1
government collects it directly
via producers. This means that
the movement along the
demand curve above is
actually caused by a leftward
shift in the supply curve, as it
raises the cost of production.
87
Chapter 9.2 How good are these
policies at reducing market
failure?
All of these polices reduce the demand for cigarettes,
Providing information Restricting the amount, you smoke:
• Negative advertising • Ban on smoking in cars with

• Ban on advertising children
• Education • Ban on smoking in public
• Concealed cabinets places
• Age limits
These policies will lead to people These policies, will reduce the
quitting, and put off people number of cigarettes
starting to smoke. This will then consumed, thus reducing
reduce demand for cigarettes, demand. It also stops no
thus leading to a reduction in smokers, particularly children
market failure from seeing cigarettes
All of these policies (including tax) will then reduce demand for
cigarettes, thus leading to a reduction in market failure, such as reducing
the impact on third parties, as well as making people realise how much
of a disadvantage cigarette can bring on themselves
Advanced:
You can draw a demand graph to

show a leftward shift in the demand
curve, to show how effective the
policies are
88
Chapter 9.3 Limitations of these

policies
Although the above policies are effective in reducing market
failure, there are some limitations to their effectiveness.
Providing information
Can be ignored
• Negative advertising
Doesn’t work on existing smokers as
• Ban on advertising
they are addicted
• Education
• Concealed cabinets
Restricting the amount, you People can still smoke at home

smoke:
Children can still be exposed at home
• Ban on smoking in cars
Smoking areas encourage a social
with children
area rather than a deterrent
• Ban on smoking in
public places Depends on the size of the tax
• Age limits
As people are addicted, the increase
in price will be irrelevant, as they will
still purchase them.
Tax
It encourages a black market for
cigarettes.
It affects those on low income more
Advanced
Addictive goods have inelastic demand,

this means that demand is largely
unresponsive to a change in price. This
is shown by a very vertical demand
curve, when supply shifts, quantity hardly
changes
89
Complete the essay, using the following structure;
A ban on cigarette advertising is an effective policy to reduce the

market failure cause by the negative externalities generated from
people smoking.
Question: ________________________
Definition : ___________________________________
(1 mark)
Point:

economies
90
“Epidemic obesity is arguably the gravest public

health crisis we face and inarguably the least
controlled.”
Dr David Katz
e r
pt
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91
Chapter 10 the obesity epidemic
Obesity has now become a greater risk to health and government

finances than smoking, but the negative externalities associated the
obesity is not being paid for by individuals.
92
Chapter 10.1 The market failure

of over consuming unhealthy food
People view unhealthy food as a demerit good, as it is over
consumed, because people underestimate the negative impacts it will
have on themselves. But, remember negative externalities are the
detrimental impacts on a third party of someone becoming obese,
which includes;
Negative consumption
externalities of Why unhealthy foods
overconsuming are a Demerit goods
unhealthy food
• Tax rises to pay for services.

• Strain on the NHS • Inability to work
• Strain on mental health • Heart disease
services • Cancer
• Strain on family members • Mental health deterioration
• Negative impacts on the • Risk of death
environment from excessive • Risk of injury
waste and packaging. • Risk of poverty
• Reduction in welfare for family • Reduction in quality of life
members through inactivity
and poor health.
• Less labour force or less
productive labour force,
impacting economic growth of
a country
93
Chapter 10.2 The monetary cost

to society
When people over-consume unhealthy food, apart from the health
costs to themselves, the actual monetary cost does not account for
the cost then imposed on society.
For example, a large big Mac

meal costs the consumer £5.29,
there are no special taxes
(excise duties) placed on the
meal, so only £1.03 is then paid in
V.A.T.
Let’s assume, that someone eats

this (or the equivalent of this) 3
times a day, it means that they
pay £3.00 a day, and therefore
£1,095 in VAT on their unhealthy
food a year.
This looks like a sizeable amount of

tax, so why should the government
interfere in our decision making? It is
a free market country, where we have
the freedom to make choices, why
should the Government tell us what to
do?
94

to society
95

to society
If each obese person gives £1095 a year in VAT on the unhealthy food
they consume, how does that compare to how much is spent on
obesity per person?
Total cost = £50bn
15 million people are

obese
Total cost per person

= £3,333
This means that each Or, they contribute

person creates a £16.4 bn, but cost the
monetary cost to tax payer £50bn, a
society of £2,238 deficit of £33.6bn
more than they pay
96

Intervention into the market for
unhealthy food
There are some provisions on the market for unhealthy food already in
place including;
• A sugar tax
• Warning labels on food- the traffic light system
• Restrictions on advertising at certain times
• Restrictions on the sale of unhealthy food
• Information campaigns
• Education
• Subsidies for some healthy food
97
1. Using your knowledge from the effectiveness of government

intervention into the cigarette market, investigate the
effectiveness of the policies already used in the unhealthy food
market.
2. Why is the government reluctant to impose greater taxes in this

market, or is it inevitable?
98
Section 4
The
Macroeconomy
99
Section 4

Economic Growth 11
Causes of growth 11.1
Country comparison 11.2
Is Economic growth always good? 11.3
Matching arguments 11.4
Over to You 11.5
Inflation 12
Real wages 12.1
Causes of inflation 12.2
Effects of inflation 12.3
Over to you 12.4
Unemployment 13
Causes of unemployment 13.1
Unemployment benefits 13.2
Participation rates 13.3
Unemployment rates 13.4
Statistics 13.5
Over to you 13.6
Government Policies 14
Fiscal Policy 14.1
Monetary Policy 14.2
Supply side policies 14.3
Conflict in policies 14.4
Over to you 14.5
100
“As sure as the spring will follow winter, economic
growth will follow recession.”
Bo Bennett
Chapter
11
101
Chapter 11 Economic Growth
Economic growth means an increase in real GDP – which means an

increase in the value of national output/national expenditure.
It means that the economy can produce more, and generates more
income for the nation.
When the graph starts to decline, but

economic growth is positive, it means the
economy is growing, but at a slower rate.
Recessions: when there are two

consecutive periods of negative
economic growth.
102
Chapter 11.1 Causes of growth
If there is more demand in the whole economy (aggregate demand),

then there will be short run growth. If there is more supply in the
economy, that creates changes to expand our economy, (long run
aggregate supply) then we have long run growth.
Short run causes = Long run causes =

increase in spending in increase in the
the economy economy’s supply, so is
able to produce more
Lower taxes Lower corporation taxes

and interest rates =
Higher wages
more investment
Lower interest rates
Investment in
More government infrastructure
spending
More working people
More consumer and
Increase in productivity
business confidence
More technology
Selling more UK goods
abroad. More efficiency
Buying less foreign More natural resources

goods.
Reduction in costs
More investment
103
Chapter 11.2 Growth by countries
The USA and the

UK, grew at
much slower
Iran
rates than China
and India, why
would this be?
Libya
Ireland
Venezuela
104
Chapter 11.3 Is Economic growth

always good for an economy?
Creates employment
More income for people
Economic growth is
good because…
Less Poverty
Less government debt
More tax revenue

More investment in
infrastructure
105
Chapter 11.3 Is Economic growth

always good for an economy?
inflation Congestion
Economic
growth is bad
because…
Low standards of
More imports-
living
purchasing foreign
goods
Pollution
inequality
106
Chapter 11.4 matching arguments

The above arguments can naturally be grouped, although any
combination is good, it helps to group them to make it easier for you
to really explain the impact.
Economic growth can; However economic growth can

also lead to;
create jobs = higher income
= less poverty More inequality and inflation which
erodes income
Because..........
Because..........
However economic growth can also lead

Economic growth can; to;
create more tax revenue= More spending on imports, which reduces

less debt= more potential revenue and the need to spend
government spending on health services because of pollution
Because.......... Because..........
Economic growth can;

However economic growth can also
Leads to a higher standard of living lead to;
as people can afford basic Lower standard of living due to
necessities, and have jobs inflation, pollution and congestion.
Because.......... Because..........
107
Pick one of the groups of arguments and complete the following essay
Evaluate whether economic growth is always good for an economy
Question: ________________________
Definition : ___________________________________
(1 mark)
Point:

economies
Advanced
Explain how expansionary fiscal policy and monetary policy can

encourage growth.
108
“Inflation is the parent of unemployment and the
unseen robber of those who have saved.”
Margaret Thatcher
te r
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Ch
12
109
Chapter 12 Inflation
Inflation is the average rise in prices, so what does this mean for us as
individuals?
Low-fat milk 26.3%

Butter 21.5%
Olive oil 18.2%
Sauces, condiments, salt, spices and culinary herbs 17.1%
Ready-made meals 16.7%
Pasta and couscous 15.9%
Jams, marmalades and honey 15.1%
Poultry 14.9%
Margarine and other vegetable fats 14.6%
2022 Eggs 11.5%
Pork 9.8%
Bread 9.7%
Potatoes 9.4%
Edible ices and ice-cream 8.9%
Fish 8.0%
Fruit 6.9%
Breakfast cereals 6.2%
Sugar 5.1%
Rice 4.4%
110
Chapter 12.1 real wages
2022 is seeing the highest inflation rates for 40 years, this erodes
people’s real income. Real income is income after inflation. If
inflation climbs faster than wages, it means people are not able to buy
as many goods and services as they could before,
Let’s assume that a person earns £1000 a month, and spends £600 on
bills and groceries.
Average Wage Inflation is

inflation 5.5% predicted to rise
to 13%
This person’s income is This person’s bills and

£1050 groceries will now cost
£678
This means that this person is £50 better off in terms of income, but their
bills have gone up by £78, meaning they have had a fall in real
income of £28 or a real pay cut of 7.5%
111
Chapter 12.2 the cause of

inflation
There are two main causes of inflation:
Demand pull is caused by Cost push is caused by
Higher wages Higher wages
More consumer Rising raw material costs

confidence
Higher import prices
Expecting future prices to
Higher taxes e.g., VAT
rise
Printing more money
112
Chapter 12.3 The effects of
inflation
Less Investment
Higher costs leaves smaller

profit margins, coupled with
higher costs of capital goods,
reduces investment.
However, firms may continue

investment, to create
cheaper costs, and will lead
to an increase in productivity
and help lower inflation
levels.
The
Loss of competitiveness when
selling goods abroad.
Of
As our prices rise, foreign
consumers will be put off
buying our goods, meaning
that we will sell less, and
bring less money into the
economy and risk buying
more, cheaper foreign
goods.
However, this is not so bad if

foreign prices also rise, or are
already higher, therefore we
will not lose competitiveness.
113
Chapter 12.3 The effects of
inflation
Menu costs
Changing pricing in shops

costs money for firms.
However, inflation is not so

bad if pricing is online, so will
only take time and no
printing costs.
Boom and bust cycle
Economic growth will lead

to higher inflation, which
means firms cannot afford
Costs their costs, and consumers
cut back spending, leading
inflation to a decline in economic
growth
However, inflation is not so

bad if the government uses
policies to reduce
inflationary pressure in
economic booms
Lower real income
People will not eb able to buy

as many goods and services
before, which risks poverty.
However, this is not so bad if

wages rise in line with
inflation.
114
Pick one of the groups of arguments and complete the following essay
using the structure below.
Evaluate whether inflation is always bad for an economy.
Question: ________________________
Definition : ___________________________________
(1 mark)
Point:

economies
Advanced
Explain how contractionary fiscal policy and monetary policy can

reduce inflation.
115
116
“Look after the unemployment and the government

budget will look after itself.”
John Maynard Keynes
te r
h a p
C
13
117
Chapter 13 Unemployment
Unemployment occurs when people are willing and able to work, but
cannot find work at the current wage rate. How bad is unemployment
for an economy and are benefits the answer to help?
118
Chapter 13.1 causes/ types of

unemployment
Structural unemployment
Unemployment, when demand for

certain products / industries falls,
leading to a loss of jobs from that
industry.
Seasonal unemployment
Unemployment, when demand for

certain products / industries falls at
different parts of the year, leading
to a loss of jobs from that industry.
Cyclical unemployment
Unemployment, when aggregate

demand falls, in the entire
economy leading to a recession
and widespread unemployment.
Frictional unemployment
Unemployment, when people are

moving between jobs, creating
temporary unemployment.
119
Chapter 13.2 What are benefits

for?
Unemployment benefits have always been a contentious issue, but

what are the economic consequences of this system.
Brings people out of

poverty
People who receive

benefits put money back Disincentives people to
into the economy. find work.
Allows people to acquire Higher taxes to pay for it.

new skills, to create long People may require
term growth in the higher wages to start
economy. working, to get more than
Ensures the welfare of the their benefits.
most vulnerable, There is no guarantee that
especially children. benefit payments will be
Helps to reduce spent responsibly.
inequality. People may become
Without it the crime rates unemployed for far
would be higher. longer, which creates a
reduction in skills.
120
Chapter 13.3 participation rates
The participation rate is the amount of people working or seeking work

between the ages of 16-64, these are the people that are economically
active. Those that are economically inactive, are those that do not wish
to work, or cannot work.
Early Retirement
Stay at home parents
Sick or disabled, and

Those in education unable to work
Discouraged
121
Chapter 13.3 Unemployment rates
The unemployment rate, is the number of people who are willing and
able to work, but cannot find a job.
The labour force is the number of people willing and able to work, that
have or do not have a job.
122
Chapter 13.4 Statistics
Participation Rate
Inactivity Rate
123
Chapter 13.5 Over to You
Using the statistics in 13.3 and 13.4, answer the following questions:
1. In 2008, the unemployment rate increased dramatically, how

much did unemployment rise, and why do you think this is?
2. What happened to the participation rate after 2020, why do you
think this is?
3. Is there a link between the participation rate and the inactivity rate
in 202, and what do you think this is?
4. Explain two polices, other than benefits, that can be used to
reduced unemployment in the UK
Advanced
Explain the link between economic growth, unemployment and

inflation
124
“A government big enough to give you everything

you want, is strong enough to take everything you
have.”
Thomas Jefferson
te r
a p
Ch
1 4
125
Chapter 14 Government policies
The government has many policies at its disposal, but they fall under
two types.
Demand Side Policies Supply Side Policies

(changes aggregate (changes aggregate
demand- AD) supply)
Reducing minimum
Fiscal Monetary
wage
Policy Policy
Reduce benefits
Reduce corporation
tax
Invest in
infrastructure
Create competitive
markets
Reduce trade
restrictions
Education and
training
126
Chapter 14.1 Fiscal Policy
Fiscal Policy
Contractionary Expansionary
(reduces AD) (increases AD)
Decrease in Increase in
Increase in Decrease in
government government
tax Tax
spending spending
Helps to: Helps to:
Reduce Inflation Increase Economic growth
Improve balance of trade, as Reduces Unemployment

our prices will be lower, so we
will buy less foreign goods and
sell more domestic goods
abroad.
But. But…:
Reduces Economic growth Increases Inflation
Increases Unemployment Worsen balance of trade, as

our prices will be higher, so we
will buy more foreign goods
and sell fewer domestic goods
abroad.
127
Chapter 14.2 Monetary Policy
Monetary
Policy
Tightening Loosening
(reduces AD) (increases AD)
Increase in Decrease in Decrease in Increase in

interest money interest money
rates supply rates supply
Helps to: Helps to:
Reduce Inflation Increase Economic growth
Improve balance of trade, as Reduces Unemployment

our prices will be lower, so we
will buy less foreign goods and
sell more domestic goods
abroad.
But. But…:
Reduces Economic growth Increases Inflation
Increases Unemployment Worsen balance of trade, as

our prices will be higher, so we
will buy more foreign goods
and sell fewer domestic goods
abroad.
128
Chapter 14.3 Supply side policies
Supply side policies aim to increase the amount we are able to

produce. The policies have the potential to:
Reducing minimum Improves

wage productivity
Reduce benefits Reduces cost of

production
Reduce corporation
tax Improves
technology
Invest in
infrastructure Improves
production methods
Create competitive
markets Encourages
efficiency
Reduce trade
restrictions
Education and
training
This is because they have the

This means that with more
ability to improve the
production and lower costs all
quantity and / or quality of
of the government’s objectives
the factors of production:
will be achieved:
Land
Low inflation
Labour
Economic growth
Capital
Low unemployment
Enterprise
Improving trade
129
Chapter 14.4 Objectives conflicts
Improve Worsen
these these
More imports
Lower
unemployment Less exports
Higher Growth Worsend

inflation
Improve Worsen
these these
Lower Inflation
Less imports
More
unemployment
More exports
Less growth
130
Find a newspaper article within the last year:
One on tax changes
One on interest rate changes.
Explain for each:
• The type of policy

• The impact on aggregate demand
• The impact on the four objectives: unemployment, inflation, growth
and balance of trade
131
132
Section 5
International
Economics
133
Section 5: International
Economics

Economic Growth and Development 15
What is Economic Development? 15.1
How to measure Development 15.2
Country world development rankings 15.3
Over to You 15.5
Globalisation 16
Causes of globalisation 16.1
Global companies 16.2
The effects of globalisation on producers 16.3
The effects of globalisation on workers 16.4
The effects of globalisation on individuals 16.5
Over to you 16.6
134
“Development is about transforming the lives of
people, not just transforming economies.”
Joseph E Stiglitz
te r
a p
Ch
15
135
Chapter 15 Why growth and

development are not the same
thing
As we saw in chapter 11.2, China has seen an enormous amount of
growth compared to the UK, and in fact China ranks second in the
world for nominal GDP, second only to the USA, but what does this
mean for development?
136
Chapter 15.1 What is
development?
Economic
Economic Growth
Development
This is economic growth +

This is the rise in
A rise in living standards
nominal and real
GDP Better infrastructure
A rise in life expectancy
A rise in levels of literacy
A rise in healthcare
137
Chapter 15.2 How to measure
development
To measure development, we use the human development index (HDI),
this is made up of three calculations:
• GDP per capita (GDP divided by the population, this is important

as countries with bigger populations can produce more, as they
have more people to produce).
• Literacy rates- helps to measure levels of education
• Life expectancy-helps to measure levels of healthcare and quality
of life.
Once a country is allocated an index number, it is then categorised into

levels of development:
• 0.8-1.0 = Very high human development

• 0.7-0.79 = High human development
• 0.55-0.7 = Medium human development
• <0.55 = Low human development
138
Chapter 15.3 Country
Foundation rankings for
Level Economics
development and Growth figures
Highest
1 st 2 nd 3 rd
Economic
growth:
Nominal
GDP
12th 28 th 31 st
GDP Per
Capita
9 th Very High 18 th Very High 19 th Very High
HDI
1 st 27 th 28 th
Life
Expectancy
139
Chapter 15.3 Country
Foundation rankings for
Level Economics
development and Growth figures
4 th 5 th 6 th
42 nd 90 th 166 th
21 st Very High 79 th High

132 nd Medium
54 th 59 th 136 th
140
1. Investigate the development figures of one of the above countries,

using these figures explain the connection, or why there is no
connection between economic growth and development.
2. Now investigate a country with very low HDI for 2021, research all
of the categories from chapter 15.3, and explain why the country is
experiencing low human development.
141
142
“Globalisation is incredibly efficient but also so far

incredibly unjust.”
Pascal Lamy
te r
a p
Ch
16
143
Chapter 16 Globalisation
Although many say Christopher Columbus’ voyage was the start of

globalisation, globalisation as we know it today began in the 1990’s,
after the collapse of the Soviet Union in 1989, and the end of the cold
war in 1991, meaning that the communist bloc, that was isolated from
the capitalist west, became integrated and freer with trade.
144
Chapter 16.1 Causes of
Globalisation
Improvements in Transport Reduction in trade barriers such

as tariffs (taxes on foreign goods)
Increase in foreign investment

Improvements in
creating a larger global flow of
Communication
money
Improvements in Technology
145
Chapter 16.2 Biggest global
companies by revenue made in 2022
Walmart : $559.2bn
State Grid : $386.6bn
Amazon: $386.1bn
China national petroleum: $284bn
Sinopec : $283.7bn
CVS health : $268.7bn
Apple: $365.8bn
Volkswagen: $263.6bn
Toyota : $258.7bn
United Health group: $257.1bn

146
Chapter 16.3 Effects of
Globalisation on producers
Access to
a wider Cheaper
market to labour
sell in
More Cheaper
Producer
skilled cost of
benefits labour production
Access Threat to Impact of

Access to business Negative
to more foreign
better from
technology raw recessions
on your own
effects on
overseas
matrials monopolies market producers
Neededing
to
International
trade barriers understand
different
laws
Currency
Language
concersaion barriers
costs
147
Globalisation on workers
Ability to
More jobs
work in
otehr
cuntries
Access to
Worker better
Access to
better
benefits training technology
and skills
Greater Lack of high

Access to output Better skilled jobs, as
technology they are Negative
more means
opportunities more jb threatens
offered to
labour from
effects on
security jobs the country of workers
origin.
Dependance
Threats of on foreign
overseas
incomes and
monopolies
leads to less demand
job security leads to less
job security
148
Globalisation on individuals
More Choice
Lower
prices
Individual's Better
quality Abity to travel
benefits goods
Greater Negative
Increased Greater demand =
culutre GDPa nd Pollution higher effects on
capital investment prices individuals
Higher Price
prices if a volititlity as
dominant they
global change
monopoly with global
takes over markets
Loss of Congestion
domestic and over
crowding
culture
149
Pick one country and complete the following essay:
Evaluate whether globalisation has always been beneficial for your

chosen economy.
Question: ________________________
Definition : ___________________________________
(1 mark)
Point:

economies
150

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Final Foundation Text Book 2022 Economics

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Foundation Level Economics

DO NOT PRINT THIS PAGE

Published October 2022

Foundation level economics course is the prelude to the GCSE

This book has been designed with students in mind,

Assessment at Foundation level

Foundation Knowledge Application Analysis Evaluation

Securing + FL9 Strong Strong Deepening Deepening

Securing FL8 Strong Strong Deepening Strong

Securing - FL7 Strong Strong Strong Strong

Developing + FL6 Strong Strong Good Good

Developing FL5 Good Good Reasonable Reasonable

Developing- Fl4 Good Good Reasonable Limited

Emerging + FL3 Reasonable Reasonable Limited

Emerging FL2 Reasonable Limited /None Limited

Fail FL1 Limited /None Limited /None Limited

Path to GCSE level

Section1: Introduction to Economics

The Economic Problem 2

Types of Economic Systems 3

“The first lesson of economics is scarcity: there is

Economics is a social science

1.1 The use of Models

• Demand and supply models

Each time a variable is changed, all others are held constant:

1.1 The use of Models

For example, we would use a demand and supply model to predict

In this case, we would hold

1.2 Rational Behaviour

Utility means that the consumer will

However, that would mean we are all

This does mean that as economists, the

cannot assume that all

individuals act ‘rationally’

according to the model all of the time.

1.3: Advanced Content

How much utility

How much from

What about 100

1.4 Over to you

Disneyworld Florida celebrated its 50th anniversary in 2022 as well

1. What will be the impact on the market for Disney land

2. What do you predict will happen to price and quantity in the

3. What other factors could occur that could change the

4. Use your understanding of Economics to explain why the

If decision making is a science, judgement is

As we now know, economics is the study of how scarce resources

In order to make decisions we use the concept of opportunity cost.

Chapter 2.1 Opportunity Cost

Opportunity cost looks at

For example, what did you have to give up in order to study

If it was Geography, then the opportunity cost of your decision is

What would be the opportunity cost

Going to the cinema?

Buying a new pair of boots?

Chapter 2.2 Factors of

Governments have to make decisions all of the time, about how to

Below, we look at these resources more closely

Chapter 2.2 Factors of