GCSE ECONOMICS 6 MARKER REVISION.

Output and movement

Prod and dependence
Economies of scale-diseconomies of scale

Skill- deskilling
Job satisfaction- yet boredom
Increased standard of living- depends of the health of the firm as they are deskilled and can
be unemployed

Best use of resources- resource exhaustion

Infrastructure development employment- loss of advantage if other regions are more
competitive leading to decline
Creates jobs locally- depends on resources
Specialisation- resource exhaustion
More jobs- if changes then decline and unemployment
Government revenue- negative externalities such as pollution
Analyse the causes and consequences of demand shifts
Income
Marketing
Tastes and fashion of current tine
Substitutes and compliments
Population
Government policies
Economic Situation
Price expectations
Eval importance of PED for consumers and producers
Producers:
They want to know PED so they know how to strategize and change prices with the
knowledge of how consumers will most likely react. With this they can change price. With a
price change comes consumer effect, which determines revenue. Thus, they can use PED for
own profits and growth.
However, this prediction of consumer response heavily relies in the time period. After
calculating PED, a firm cannot suddenly change prices, but rather fully create a strategy
before implementing the price change. This frictional lag can be the cause to a misused price
change as the market competition changed in that time or could be bad for the long term, but
good in the short.

Firms want to know PED as it helps them understand how to change up their elasticity. If
a firm is price elastic in demand, they may want to change up their elasticity to being slightly
more elastic to help them decrease prices less but maintain high demand. They can then
change up the determinants of their elasticity such as making a common product but beating
their competitors as price can be reduced in the future to gain high popularity yet remain
elastic.
However, PED calculations are reliant on the fact that good market research has been done,
meaning at times bad market research- inaccurate calculations- > misleading and
insignificant PED.
The actions of competitors: elasticity is calculated with the assumption of ceteris paribus (all
other things equal). However, if a firm changes its price, it is likely that competitors will also
change theirs. This may make any PED calculations irrelevant.

Consumers
Price elasticity of demand can be useful for a consumer as it helps them identify and predict
their financial stability for the future. knowing PED-> its inelastic for consumer-> consumer
realises that in future, more money will be spent in that as firms will most likely increase
price -> consumer knows how to wisely spend on things that are elastic and unnecessary.
However, this, though for the future, can quite possibly impractical as the general public is
hardly ever concerned or able to calculate PED of something they are not a part of, i.e a
firm. Without calculations, they are not accurately aware of how firms will change prices and
to what extent.

Price elasticity knowledge-> rising prices in future-> consumer can start their search for
substitutes quickly -> they can look for a cheaper firm to invest in.
However, again this is impractical as one cannot have full knowledge and all this knowledge
and importance of PED heavily relies on predictions being made by the consumer. This may
just result in the consumer waiting till an actual price change occurs before going out to
search for a substitute or even giving up, meaning having prior insight and knowledge of
PED will not be very useful.
Analyse the consequences and causes of shift of the supply curve and movements
Costs of production
Taxes and subsidies
Technology
Climate
Increase in market supply
Government regulation
Higher efficiency
Economies of scale
More sales
Can lead to monopoly of market
Caused by price movements maybe as a result of demand shift.
Eval importance of PES to consumers and producers
Producers
Firms want to know PES as it can help understand how responsive they are to a change in
price (demand shift). With knowledge, they can understand and forecast how well they will
be able to cope -> strategies-> how they can combat this-> thus, useful as it helps forecast
before it is too late.
However, as said, PES calculations are also based on predictions of how demand will change
and cause price changes, and this can be inaccurate due to sudden changes in the market or
economy which can mean the calculation is futile-> can lead to firm misusing resources.

Pes knowledge-> how change in demand will increase price-> if inelastic, price will rise with
high volatility which is not beneficial as it is a more extreme change to cope with-> firms
can try improving their elasticity-> can increase or decrease elasticity with (tech, spare
capacity, stock, storage,)
However, increasing elasticity has a cost-> cost opens up opportunity cost for firm->
rethink whether to improve elasticity-> thus, PES not always easy and fully helpful to
implement.
Consumers
PES has an effect on consumers- PES determines how consumers will face price increases in
comparison to getting more of a product-> allows them to recognise not to overspend or in
general how much to spend-> useful as it allows them to understand the value and
spending on a product.
However, PES may not directly be useful-> PES cannot be calculated by them -> many,
therefore, don’t know about PES -> therefore the effect of PES is important but having
KNOWLEDGE about the exact numerical value is not necessarily important.

By knowing PES-> determinant of how expensive it will also be-> allows them to recognise
and get a feel for price -> if too expensive -> can start looking for substitutes
However, PES is not in the control of consumers at all and thus knowing it doesn’t really help
them much more than seeing the obvious price tag-> they could definitely go without
having to know PES but again it can have an effect on their spending

Impact of competition
Producers
Competition-> want to stay in market-> must be efficient-> this they cut costs-> profits and
success
However, one way of cutting costs-> getting rid of workers instead of robots-> higher
efficiency-> but also loss of customers as workers are also a large proportion of the
customers for a firm

Competition-> must innovate to stay in market-> innovation is unique-> consumer may like-
> high revenue and profits
However, competition-> innovation can be very useless and not researched well to suit
target market-> investment in project or new innovative product is futile-> could lead to a
loss-> could drive them out of a market.
Consumers
Competition-> price comp.-> reduction of prices-> can buy more-> higher standard of
living as they have more to spend on
However, this depends on product quality as-> competition-> cutting costs and finding
shortcuts-> could lead to harmful or bad quality product as a result-> standard of living rise
is minimal

Competition-> more firms in market-> innovation-> wider variety and choice-> can buy
multiple products and can be catered to specific needs rather than general products
However, competition-> many products innovated-> some are useful but some are useless->
can be persuaded to buy products which are useless-> waste of money

Evaluating importance of production and productivity on the economy

Production
Production increase-> more needs to be produced-> more factors of production required->
employment increases
However, this is not always true-> to manage and produce a lot, companies may implement
robots and automation to be more efficient-> less workers and possible sacking of workers-
> minimal or no employment gains seen in economy

Higher production-> more products in market-> higher market supply-> variety of products
for consumers-> more to buy-> can increase material living standards
However, the rise of products provides a disadvantage-> this is higher manufacturing effects-
> higher pollution and environmental.
Productivity
As productivity increases and aim to be internationally competitive-> efficient-> higher
output per input-> decreasing costs-> alongside with economies of scale-> which allow firms
and economy to grow.
However, not always the case as international competitiveness can increase-> world
attraction to those products-> this leads to falling exports in the UK and thus this economic
growth is slightly hindered?

Increased output of country-> higher GDP -> which is a sign of economic growth a key
macro-objective
However, this can bring along a cost to significant macro-objective-> as efficiency is aim->
quicker production required-> robots-> can cause unemployment.
Evaluating the importance of cost, revenue, profit, and loss for producers
Cost
Costs are always existent-> so their knowledge of costs-> able to manage finances-> can
force profits
However, costs can be disregarded-> sometimes they are necessary-> you can over-invest to
get into slight loss-> this can be to seek long term profits rather than short term

Costs knowledge-> production costs determine selling price-> therefore if firms know their
cost-> thy know how much they will sell for-> which means they can also predict response of
customers to that price level
However, costs knowledge may not be useful-> sometimes costs can increase without your
power like taxation-> you are not in control-> price level of products can be out of control as
you are forced to increase them

Revenue
Revenue is important-> it’s the medium which determines costs vs profits-> allows firms to
know the consequences of falling or increasing revenue
However, short term increases or decreases are not important as they unsteady and can
change-> so long term is important

Revenue when increasing-> greater profits. ->Investment-> expansion

However, the extent of expansion depends on the management and use of resources and
profits-> it isn’t fully dependant on just revenue and profits as there are many factors
Profits
Same as above
Loss
Same as above

Analyse the factors affecting demand and supply for labour

Demand
Demand for products: demand increases-> labour is derived demand-> so demand for labour
increases
Wage rate: if wage rates increase, the demand of labour will shift to the left as less willing to
pay more people at a high rate
Real wages: demand shift to right as it is lower cost for producers to not have to pay in
proportion to the increase in general price lever
Productivity: if productivity increases, firms are able to pay more workers a higher wage.
Profits: expansion of firm so more labour needed
State of economy: growing economy-> more labour
Supply
Wage rate: increases supply as more people willing to work
Monetary payments: ability to earn more if overtime/ productivity/ bonuses is shift to right
Non-monetary: better working conditions so more people willing to work
Education and training: more people wanting to work as more are educated
Barriers to entry: Qualifications can reduce supply of labour
Size of population: if increases, market supply of labour
Evaluating the importance of the financial sector for Consumers, Producers, and
Government
Consumers
It can be important for credit provision-> can buy now play later and thus having better
quality of life and consumption can be increased-> as they can buy more stuff.
However, there is a chance that consumers can go into a large debt as, if they don’t realise the
size of the loan-> they can underestimate it-> trouble when having to pay it off.

Liquidity-> ability to turn asset into cash-> gives them the ability to borrow now and pay
later against an asset like a house.
However, same as above. It’s used to pay loans but can induce more loans as a result of it.

Risk management-allows savers to spread risk by putting their money into range of
companies, meaning, if one falls, they will not face a big loss.
However, in a significant recession even risk management cannot fully save one from feeling
a loss.

Producers
Can borrow money-> can invest->can expand
However, if business fails-> leads to loss and on top of that, debt-> tough situation

Can allow for overdraft facilities-> allows for money usage-> gives them higher flexibility
and allows them to continue normal schedule
However,

Analyse the determinants of economic growth

Investment
Investment-> more efficient capital-> more can be produced in a given time
Investment-> higher aid to workers-> economy can make more
Changes in technology
Better technology-> quality of capital goods-> efficiency-> higher output and economic
growth
Better use of factors of production-> higher output (using CELL more efficiently)
Size of the workforce
Larger workforce-> more willing to work-> more can be made if they are all theoretically
employed
Education and training
Quality and quantity of labour-> more skilled workers-> more efficient-> more output for
economy
Natural resources
Finding new resources -> more that can be made in the economy as more is available and in
demand possibly
Vice versa can occur if the resources are being run out before they can be reused
Government policies
Government spending could help or not help production of things-> could increase or
decrease the level of output

Evaluating the benefits and costs of economic growth

Benefits
Quality of life increases= economic growth-> higher output-> lower costs-> easier to buy
However, economic growth leads to more people being able to spend on items with negative
consequences-> fast food-> diseases of the rich-> so limited quality of life.

Higher output being made> more workers needed-> employment rises

However, limited as economic growth can lead to investment-> automated technology-> less
workers needed
Costs
Economic growth-> car ownership as people get better salaries and ect-> air pollution due to
larger number of cars, leading to emissions into the atmosphere
However, as economic growth increases-> spending and development of more econ friendly
technology-> electric cars for example and developing engine technology-> this cost is
limited

Economic growth-> demand pull could occur> inflation possibly

However, this inflation can be minimised-> monetary police from the government can control
this and it is also considered healthy to an extent.

Workplace stress as they are required to produce more which means they have to work harder
However, economic growth and the investment of capital and technology is significantly
helping worker in the production lines,
Evaluating the causes and consequences of unemployment
Cyclical employment- caused by problems in economy, leading to fall in demand and fewer
workers needed to make output in an economy
Frictional unemployment- time lag between jobs
Seasonal unemployment- demand falls in different seasons
Structural unemployment- fall in decline and demand in certain industries such as steel so
they close down
Benefits
Lower inflation due to lower overall wages, less people having a wage, thus less overall
demand.
However, this situation of controlled and lowering inflation is only good when inflation is
high. When low, this can be unhealthy for the economy.

International competitiveness- lower costs to firm if wage rates are low (workers have to
work at these because they have no other choice) - higher efficiency and competitiveness,
beneficial for economy and exports
However, only true to extent. Low wages-> more benefits-> more government spending->
not very beneficial as government budget is being used there

Costs:
Individuals:
Lower standards of living: people don’t work so they can’t afford a house or general items
EVAL: benefits can provide some support

Lower income: low unemployment benefits for those who don’t have a job
Eval: may be frictional or temporary in the economy

Higher taxes for benefits use.

Government may not raise taxes if they know situation is temporary and seasonal rather than
a depression or decline of the economy
Government:
Lower output: if they economy resources are not being used to their max potential then
output is not where it could be.
Eval: however, this is necessary so we don’t overuse the resources of production and always
have a spare capacity of them
Budget deficit can be caused due to high spending on benefits in comparison to earning in tax
revenue
Eval: this can be minimised with fiscal policies which can increase a chain of output and
employment in the economy.
Evaluating the causes of differences in distribution of incomes and wealth
Income:
Wage differences: some jobs require more skill or have different elasticities thus higher pays.
This can mean everyone is unique and can have very different salaries.
Eval: though wages are a large determinant in income inequality as they make up a lot of our
income, they are not the only one and it is how wages are handled. Some people may earn the
same but one can invest while one can spend it all on depreciating things.
Gender: different genders are meant to earn the same but due to some cultural stereotypes,
women may spend more time looking after time, so on average men earn.
Eval: this is being minimised as these stereotypes are being broken in our advancing world.
This also isn’t as significant of a cause.
Wealth
Inheritance: families may pass down possessions like properties to their children and tt.is will
give them an advantage as they are appreciating things
Eval: this is only very true in wealthier and richer parts of the country, where the parents are
bale to pass down a significant amount, otherwise this is quite insignificant.
Property: some people are able to buy properties which means increasing incomes and asset
value
Eval: this is for most people but the truth of causing an actual difference depends on who can
buy the more expensive property. However, more expensive properties are put on rent very
little, due to lack of renting success, meaning it has to be a balance.
Evaluating the consequences of income and wealth inequality
Costs:
Housing: those who cannot earn as much will be able to live in lower quality housing or not
even be able to afford housing at all
Eval: the council can help provide houses which are not low quality and are usually
maintained before being offered.
Health: people who do not earn as much will be less likely to buy healthy food or medicines
meaning they have a lower standard of living and health issues usually
Eval: nhs can provide free prescriptions to those who need it and this helps those you need
the necessary medication.
Benefits:
Motivation: people are motivated to work harder
Eval: only to certain extent as if something is hopeless then motivation can be seen as quite
futile and this doesn’t get rid of the fact that inequality is a bad thing.
Trickle-down effect: richer people spend on business which provides many jobs for those
who aren’t as rich and without this, we would lose many jobs and wages would go down.
Eval: working conditions may still be bad and they can be bad paying jobs.
Evaluating causes of inflation
Demand pull inflation-> demand higher rate than supply rate-> can be due to increased
incomes-> higher prices
Depends on interest rates as demand and spending only increase when interest rates are low
which in turn causes inflation, so spending is not always a big cause.

Cost push inflation> costs of production rises if trade union power increases-> higher wages-
> higher demand-> inflation, and repeat
Eval: this is not always the case though as a) trade union gaining too much power is unlikely
and seeing as automation is increasing, firms are less bothered about workers and can deal
with not agreeing to trade unions.
b) again, workers may want to save rather than spend just because their wages increase and
turns out it is not as significant as it seems,
Consequences of inflation
Consumers
Loss of consumer confidence as it makes it much harder to purchase things, as lower
purchasing power at the higher purchasing powers
Not always true as real wages also tend to increase at the same time meaning that purchasing
power stays roughly the same

Fall in real income: if inflation rises at a faster rate, less purchasing power
However, trade unions can go against that and be unwilling to sell their workers for firm’s
wages, if they do not comply with the rate of inflation
Producers
Menu costs as they have to keep updating their prices and stuff
May be beneficial as in the end they could be charging more and getting more revenue and
profits so hey why not
Increased production costs as prices of input rise
They could easily solve this by raising prices of products and getting money from their which
is anyways expected to a certain extent so not much of a bad issue.
Saver
Lower real interest rates
However, this is not a big issue as they can quickly invest in something with the same or
similar effect: stable stocks for example
Lower purchasing power of the saved money as inflation rises
Not much issue as most savers know interest rates are lower than inflation rates anyways and
just don’t want to spend.
Government
Government as employer: inflation leads to pressure on the government to increase wages for
its employees, such as NHS and state school staff. This can lead to costly industrial disputes
and, if wage rises are agreed, increased government spending.
Could be beneficial if NHS staff and people have more money, so more disposable income
and thus higher demand leading to economic growth.
Analyse how fiscal policy can achieve macro objectives and how It affects markets and
the whole economy
Evaluating the costs of fiscal policy
Consumers may not increase spending just because taxes are involved
Eval: this is not significant as an average, demand will increase in some way and it is long
term, so it will still be somewhat beneficial eventually.

If they spend, then they don’t in another, and if they cut taxes, then they don’t have the
liberty to spend.
However, fiscal policy can be short-term focussing on one area at a time depending on the
state of the economy and that certain sector.

Evaluating benefits
Faster acting than monetary policy meaning its mor effective as a way of manipulating the
economy
Eval: however, this does not make it fast and are there always time lags which can be
ineffective if done at the wrong time
It can be effective in changing the economy: it can cause growth or it can achieve macro-
objectives
Eval: If demand is rising but supply cannot keep up then costs ca rise and the general price
level can increase too much which is unhealthy for the economy.

Evaluating the consequences of redistribution methods

Reduces inequality
Doesn’t trickle down and benefits are still very low in the UK.

People may not want to work as they are reliant meaning reduced economic growth as they
are not earning.
However, this is not very likely as a) universal credit and gov check if you are trying to work
and b) benefits are so low that people are not necessarily comfortable with the amount they
get so will want to work.
Analysing the effect of monetary policy and falling interest rates
Growth:
 Consumer spending and borrowing changes as they spend more and save less so
increased demand
 Investment by firms increases leading to improved capital and increased spending and
output
Employment:
 Spending and borrowing of consumers increases so more demand and more
employment.
 Same for firms: can spend more and create more output thus increase employment as
workers are required
Price stability:
 Spending and borrowing increases so more demand, more demand means higher
prices and a rise in the general price level
 Firms: more spending on capital good, so high quality products and increased demand
and general price level increases.
Evaluating the effect of monetary policy on consumers if lowering interest rates
Spending
 Increased spending if interest rates fall meaning that demand increases
o However, the change of interest rates from previous should be large for this to
happen and will to be much of an effect if it is small.
 Incomes can decrease if you rely on incomes from savings
o Most likely to affect older population as younger population gets income from
jobs
Borrowing:
 Mortgages: people more likely to borrow money for houses
o However, this is minimal and borrowing depends on whether the bank is
willing to give you money based on you job not just the interest rate.
 Consumer confidence can rise as low cost of borrowing and means they are able to
afford more as the effect of inflation and purchasing price increases
o This is not always true as people may lack confidence in the stability of the
economy such as in COVID, meaning it won’t lead to high spending.
Saving:
 Consumption increases and saving falls meaning hard for those who rely on savings
o Savings can be transferred to stocks or other forms of passive income
 Real rate of interest will mean people will be saving less and be less likely to save and
deposit money:
o However, this is not true if interest rate is higher than inflation as then, there
would still be and advantage of saving.