Specification points

Edexcel International AS and A level Economics XEC11/YEC11

416 points in 4 topics, with Edexcel's codes and titles.

Codes and titles are read by a script from Edexcel's published specification and have not been checked by a person. What each point covers is in the specification itself: Edexcel’s specification.

1.3 Markets in action

1.3.1 Introductory concepts
1.3.1.1 The nature of economics
1.3.1.1.a Economics as a social science
1.3.1.1.b The development of models in economics based on assumptions
1.3.1.1.c The ceteris paribus assumption
1.3.1.2 Positive and normative economics
1.3.1.2.a The distinction between positive statements and value judgements on economic issues
1.3.1.2.b The role of value judgements in influencing economic decision making and policy
1.3.1.3 Scarcity
1.3.1.3.a The problem of unlimited wants and finite resources
1.3.1.3.b The distinction between renewable and non-renewable resources
1.3.1.3.c The link between scarcity and opportunity cost
1.3.1.3.d The distinction between free goods and economic goods
1.3.1.4 Production possibility frontiers
1.3.1.4.a Using production possibility frontiers
1.3.1.4.b Movements along and shifts in production possibility frontiers
1.3.1.4.c The distinction between capital goods and consumer goods
1.3.1.4.d The significance of capital goods for productivity and economic growth
1.3.1.5 Specialisation and the role of money and financial markets
1.3.1.5.a Specialisation and the division of labour
1.3.1.5.b Functions of money
1.3.1.5.c The role of financial markets
1.3.1.6 Free market, mixed and command economies
1.3.1.6.a The distinction between free market, mixed and command economies
1.3.1.6.b The advantages and disadvantages of free market and command economies
1.3.1.6.c The role of the state in a mixed economy
1.3.2 Consumer behaviour and demand
1.3.2.1 Rational decision making
1.3.2.1.a Rationality assumption: utility and profit maximisation
1.3.2.1.b Why consumers may not maximise utility
1.3.2.2 The demand curve
1.3.2.2.a The concept of ‘demand’
1.3.2.2.b Movements along and shifts of a demand curve
1.3.2.2.c Diminishing marginal utility and the demand curve
1.3.2.2.d Causes of shifts in the demand curve
1.3.2.3 Price, income and cross-elasticities of demand
1.3.2.3.a The concepts of ‘price’, ‘income’ and ‘cross-elasticities of demand’
1.3.2.3.b How to use formulae to calculate price, income and cross-elasticities of demand
1.3.2.3.c Interpretation of numerical values of price elasticity of demand
1.3.2.3.d The factors influencing price elasticity of demand
1.3.2.3.e How to calculate total revenue
1.3.2.3.f How price elasticity of demand varies along a straight line demand curve
1.3.2.3.g The relationship between price elasticity of demand and total revenue
1.3.2.3.h Interpretation of numerical values of income elasticity of demand
1.3.2.3.i Interpreting cross elasticity of demand
1.3.2.3.j Significance of elasticities of demand
1.3.3 Supply
1.3.3.1 The supply curve
1.3.3.1.a The concept of ‘supply’
1.3.3.1.b Movements along and shifts of a supply curve
1.3.3.1.c Causes of shifts in the supply curve
1.3.3.2 Price elasticity of supply
1.3.3.2.a The concept of ‘price elasticity of supply’
1.3.3.2.b Calculation and interpretation of numerical values of price elasticity of supply
1.3.3.2.c Factors that influence price elasticity of supply
1.3.3.2.d Short run, long run and price elasticity of supply
1.3.4 Price determination
1.3.4.1 Determination of market equilibrium
1.3.4.1.a Equilibrium price and quantity
1.3.4.1.b Causes of changes in equilibrium price and quantity
1.3.4.1.c The operation of market forces to eliminate excess demand and excess supply
1.3.4.2 Consumer and producer surplus
1.3.4.2.a The distinction between consumer and producer surplus
1.3.4.2.b Changes in consumer and producer surplus
1.3.4.3 Functions of the price mechanism
1.3.4.3.a Rationing, incentive and signalling functions
1.3.4.3.b The price mechanism in different markets
1.3.4.4 Indirect taxes and subsidies
1.3.4.4.a The impact of indirect taxes on consumers, producers and the government
1.3.4.4.b The incidence of indirect taxes on consumers and producers
1.3.4.4.c The impact of subsidies on consumers, producers and the government
1.3.4.4.d The incidence of subsidies on consumers and producers
1.3.5 Market failure
1.3.5.1 Sources of market failure
1.3.5.1.a Why market failure occurs
1.3.5.1.b Sources of market failure
1.3.5.2 Positive and negative externalities
1.3.5.2.a The distinction between private benefits, external benefits and social benefits
1.3.5.2.b The distinction between private costs, external costs and social costs
1.3.5.2.c External costs and benefits of production and consumption
1.3.5.2.d Diagrams of externalities using marginal analysis
1.3.5.2.e The impact of externalities in various contexts
1.3.5.3 Non-provision of public goods
1.3.5.3.a The distinction between public and private goods
1.3.5.3.b Public goods and the free-rider problem
1.3.5.4 Imperfect market information
1.3.5.4.a The distinction between symmetric and asymmetric information
1.3.5.4.b The significance of information gaps
1.3.5.4.c Imperfect information and misallocation of resources
1.3.5.5 Moral hazard
1.3.5.5.a How moral hazard occurs
1.3.5.5.b Impact of moral hazard in insurance and banking
1.3.5.6 Speculation and market bubbles
1.3.5.6.a How market bubbles arise
1.3.5.6.b Impact of market bubbles
1.3.6 Government intervention in markets
1.3.6.1 Purpose and methods of government intervention
1.3.6.1.a The purpose of government intervention, including reference to market failure
1.3.6.1.b Methods of intervention
1.3.6.1.c Contexts for government intervention
1.3.6.2 Government failure
1.3.6.2.a ‘Government failure’ as intervention that results in a net welfare loss
1.3.6.2.b Causes of government failure

2.3 Macroeconomic performance and policy

2.3.1 Measures of economic performance
2.3.1.1 Economic growth
2.3.1.1.a Real GDP growth as a measure of economic growth
2.3.1.1.b Gross National Income (GNI) as an alternative measure of national income
2.3.1.1.c Distinctions between measures of GDP and GNI
2.3.1.1.d Comparison of GDP/GNI rates of growth between countries and over time
2.3.1.1.e Purchasing power parities
2.3.1.1.f The distinction between positive economic growth rates and negative economic growth rates
2.3.1.1.g The concept of ‘recession’ as two consecutive quarters of negative economic growth
2.3.1.1.h Limitations of GDP and GNI for comparing living standards
2.3.1.1.i National happiness and wellbeing
2.3.1.2 Inflation
2.3.1.2.a The concepts of inflation, deflation and disinflation
2.3.1.2.b Measuring inflation with a consumer price index
2.3.1.2.c Limitations of the CPI as a measure of the rate of inflation
2.3.1.2.d The producer price index
2.3.1.2.e Causes of inflation
2.3.1.2.f Causes of deflation
2.3.1.2.g Effects of inflation and deflation
2.3.1.3 Employment and unemployment
2.3.1.3.a Measuring unemployment: the ILO definition
2.3.1.3.b The causes of unemployment
2.3.1.3.c Effects of unemployment
2.3.1.3.d The distinction between unemployment and underemployment
2.3.1.3.e The significance of changes in rates of employment, unemployment and economic inactivity
2.3.1.3.f The significance of net migration for employment and unemployment
2.3.1.4 Balance of payments
2.3.1.4.a Components of the balance of payments
2.3.1.4.b Deficits and surpluses in trade in goods and services
2.3.1.4.c Current account deficits and surpluses
2.3.2 Aggregate demand (AD)
2.3.2.1 The characteristics of AD
2.3.2.1.a The concept of AD
2.3.2.1.b Components of aggregate demand
2.3.2.1.c Movements along and shifts of the AD curve
2.3.2.2 Consumption (C)
2.3.2.2.a Influences on consumption
2.3.2.2.b The relationship between savings and consumption
2.3.2.2.c The definition of the ‘savings ratio’
2.3.2.2.d Causes and effects of changes in the savings ratio
2.3.2.3 Investment (I)
2.3.2.3.a The distinction between gross investment and net investment
2.3.2.3.b Influences on investment
2.3.2.3.c Government policy to promote investment
2.3.2.4 Government expenditure (G)
2.3.2.4.a Influences on government expenditure
2.3.2.5 Net trade balance (X−M)
2.3.2.5.a Influences on the net trade balance
2.3.3 Aggregate supply (AS)
2.3.3.1 Characteristics of aggregate supply
2.3.3.1.a The concept of aggregate supply
2.3.3.1.b The AS curve
2.3.3.1.c Movements along and shifts of the AS curve
2.3.3.2 Short-run AS (SRAS)
2.3.3.2.a Factors influencing short-run aggregate supply
2.3.3.3 Long-run AS (LRAS)
2.3.3.3.a Different shapes of AS curve
2.3.3.3.b Factors influencing long-run aggregate supply
2.3.4 National income
2.3.4.1 National income
2.3.4.1.a The circular flow of income
2.3.4.1.b The distinction between income and wealth
2.3.4.2 Injections and withdrawals
2.3.4.2.a The distinction between injections and withdrawals
2.3.4.2.b Injections
2.3.4.2.c Withdrawals
2.3.4.2.d Net injections, net withdrawals and the circular flow
2.3.4.3 Equilibrium level of real output
2.3.4.3.a The concept of equilibrium level of real national output
2.3.4.3.b Causes of changes in equilibrium real national output
2.3.4.4 The multiplier
2.3.4.4.a The multiplier and multiplier process
2.3.4.4.b Marginal propensities and their effects on the multiplier
2.3.4.4.c Calculating the multiplier
2.3.4.4.d Significance of the multiplier
2.3.5 Economic growth
2.3.5.1 Causes of growth
2.3.5.1.a The distinction between actual and potential growth
2.3.5.1.b Actual growth caused by an increase in the components of AD
2.3.5.1.c The importance of international trade for export-led growth
2.3.5.1.d Causes of potential growth
2.3.5.1.e The importance of productivity for the rate of economic growth
2.3.5.2 Benefits of growth
2.3.5.2.a Possible benefits of growth
2.3.5.3 Costs of growth
2.3.5.3.a Possible costs of growth
2.3.5.4 Output gaps
2.3.5.4.a The difference between actual growth rate and long-term trends in growth
2.3.5.4.b The distinction between positive and negative output gaps
2.3.5.4.c Characteristics of positive and negative output gaps
2.3.5.4.d Difficulties of measuring output gaps
2.3.6 Macroeconomic objectives and policies
2.3.6.1 Macroeconomic objectives
2.3.6.1.a Economic growth
2.3.6.1.b Low and stable rate of inflation
2.3.6.1.c Low unemployment
2.3.6.1.d Balance of payments equilibrium on current account
2.3.6.1.e Balanced government budget
2.3.6.1.f Greater income equality
2.3.6.2 Possible conflicts between macroeconomic objectives
2.3.6.2.a Inflation and unemployment, including the short-run Phillips curve
2.3.6.2.b Economic growth and protection of the environment
2.3.6.2.c Inflation and equilibrium on the current account of the balance of payments
2.3.6.2.d Economic growth and income equality
2.3.6.3 Macroeconomic supply-side policies
2.3.6.3.a Supply-side policies designed to increase productivity, competition and incentives
2.3.6.3.b Free market policies
2.3.6.3.c Interventionist policies
2.3.6.3.d Strengths and weaknesses of different supply-side policies
2.3.6.4 Macroeconomic demand-side policies
2.3.6.4.a Demand-side policies
2.3.6.4.b Fiscal policy instruments
2.3.6.4.c Monetary policy instruments
2.3.6.4.d The role of central banks in the conduct of monetary policy
2.3.6.4.e Strengths and weaknesses of different demand-side policies

3.3 Business behaviour

3.3.1 Types and sizes of businesses
3.3.1.1 Types of business
3.3.1.1.a Types of businesses
3.3.1.2 Size of businesses
3.3.1.2.a The size of businesses
3.3.1.2.b How businesses grow
3.3.1.2.c Advantages and disadvantages of each type of merger/takeover
3.3.1.2.d Constraints on business growth
3.3.1.2.e Reasons some firms tend to remain small and others grow
3.3.1.2.f Impact of growth of firms on businesses, workers and consumers
3.3.1.2.g Demergers
3.3.1.3 Business objectives
3.3.1.3.a Different business objectives
3.3.1.3.b Divorce of ownership from control: the principal-agent problem
3.3.1.3.c Formulae for different business objectives
3.3.2 Revenue, costs and profits
3.3.2.1 Revenue
3.3.2.1.a Total, average and marginal revenue
3.3.2.1.b Price elasticity of demand and its relationship to revenue concepts, including calculations
3.3.2.2 Costs
3.3.2.2.a Derivation of short-run cost curves from the assumption of diminishing marginal productivity
3.3.2.2.b The law of diminishing returns
3.3.2.2.c Total, fixed, variable, average and marginal costs
3.3.2.2.d Relationships between product and cost curves
3.3.2.3 Economies and diseconomies of scale
3.3.2.3.a The relationship between long-run cost curves and economies/diseconomies of scale
3.3.2.3.b Minimum efficient scale
3.3.2.3.c Distinction between internal/external economies of scale
3.3.2.3.d Sources of internal economies of scale
3.3.2.3.e Sources of external economies of scale
3.3.2.3.f Sources of diseconomies of scale
3.3.2.4 Profits and losses
3.3.2.4.a The distinction between normal profit, supernormal profit and losses
3.3.2.4.b Short-run and long-run shutdown points
3.3.3 Market structures and contestability
3.3.3.1 Efficiency
3.3.3.1.a Types of efficiency
3.3.3.2 Concentration ratio
3.3.3.2.a Calculation of n-firm concentration ratios
3.3.3.2.b The significance of concentration ratios
3.3.3.3 Perfect competition
3.3.3.3.a Assumptions of perfect competition
3.3.3.3.b Profit-maximising equilibrium in the short run and long run
3.3.3.3.c The short-run shutdown point
3.3.3.3.d Productive and allocative efficiency in the short run and long run
3.3.3.4 Monopolistic competition
3.3.3.4.a Assumptions of monopolistic competition
3.3.3.4.b Types of product differentiation
3.3.3.4.c Profit-maximising equilibrium in the short run and long run
3.3.3.4.d Productive and allocative efficiency in the short run and long run
3.3.3.5 Oligopoly
3.3.3.5.a Assumptions of oligopoly
3.3.3.5.b Barriers to entry and exit
3.3.3.5.c Interdependence of firms
3.3.3.5.d Costs and benefits of collusion to producers, consumers, workers and governments
3.3.3.5.e Price competition
3.3.3.5.f Non-price competition
3.3.3.5.g Costs and benefits of price and non-price competition
3.3.3.6 Monopoly
3.3.3.6.a Assumptions of monopoly
3.3.3.6.b Barriers to entry and exit
3.3.3.6.c Profit-maximising equilibrium
3.3.3.6.d Costs and benefits of monopoly to firms and consumers
3.3.3.6.e The concept of ‘natural monopoly’ and its implications
3.3.3.6.f Conditions necessary for third-degree price discrimination
3.3.3.6.g Costs and benefits of price discrimination to firms and consumers
3.3.3.6.h Productive, allocative and dynamic efficiency
3.3.3.7 Monopsony
3.3.3.7.a Assumptions and conditions for a monopsony to operate
3.3.3.7.b Costs and benefits of a monopsony to firms, consumers and employees
3.3.3.8 Contestability
3.3.3.8.a Characteristics of contestable markets
3.3.3.8.b Contestable markets and firms' behaviour
3.3.3.8.c Costs and benefits of contestability for firms and consumers
3.3.3.8.d The significance of sunk costs for contestability
3.3.4 Labour markets
3.3.4.1 The demand for labour
3.3.4.1.a Factors that influence the demand for labour to a particular occupation
3.3.4.1.b Factors that influence the elasticity of demand for labour
3.3.4.2 The supply of labour
3.3.4.2.c Factors that influence the supply of labour to a particular occupation
3.3.4.2.d Factors that influence the elasticity of supply of labour
3.3.4.3 The determination of wage rates in competitive and non-competitive markets
3.3.4.3.a Labour market equilibrium
3.3.4.3.b Causes of changes in equilibrium wage and employment
3.3.4.3.c Wage setting in the public sector/state-owned enterprises
3.3.4.4 Market failure in the labour market
3.3.4.4.a Causes and consequences of the geographical immobility of labour
3.3.4.4.b Causes and consequences of the occupational immobility of labour
3.3.5 Government intervention
3.3.5.1 Government intervention in product markets
3.3.5.1.a The case for government intervention
3.3.5.1.b Measures to control monopolies and mergers
3.3.5.1.c Measures to promote competition and contestability
3.3.5.1.d Measures to protect suppliers and employees
3.3.5.1.e Impact of government intervention measures on markets
3.3.5.1.f Limits to government intervention
3.3.5.2 Government intervention in labour markets
3.3.5.2.a The case for government intervention
3.3.5.2.b Types of government intervention in labour markets and their effects

4.3 Developments in the global economy

4.3.1 Causes and effects of globalisation
4.3.1.1 Characteristics of globalisation
4.3.1.1.a Increase in trade as a proportion of GDP
4.3.1.1.b Increase in importance of transnational companies (TNCs) and foreign direct investment (FDI)
4.3.1.1.c Increase in migration
4.3.1.2 Causes of globalisation
4.3.1.2.a Factors contributing to increased globalisation in the last 50 years
4.3.1.2.b FDI by TNCs
4.3.1.3 Effects of globalisation
4.3.1.3.a Possible benefits of globalisation
4.3.1.3.b Possible costs of globalisation
4.3.2 Trade and the global economy
4.3.2.1 Specialisation and comparative advantage
4.3.2.1.a Benefits and costs of specialisation and trade in the international context
4.3.2.1.b The theory of comparative advantage
4.3.2.2 Patterns and volume of world trade
4.3.2.2.a Patterns of trade and causes of change
4.3.2.2.b Changes in trade flows between countries, and the reasons for these changes
4.3.2.3 Terms of trade
4.3.2.3.a Calculating the terms of trade
4.3.2.3.b Factors influencing the terms of trade
4.3.2.3.c Impact of changes in the terms of trade
4.3.2.4 Trade liberalisation and trading blocs
4.3.2.4.a The role of the World Trade Organization (WTO) in trade liberalisation
4.3.2.4.b Types of trading blocs
4.3.2.4.c Costs and benefits of membership of a trading bloc
4.3.2.4.d Possible conflicts between trading blocs and the WTO
4.3.2.5 Restrictions on free trade
4.3.2.5.a Reasons for restrictions on free trade
4.3.2.5.b Types of restrictions on free trade
4.3.2.5.c Impact of protectionist policies
4.3.3 Balance of payments, exchange rates and international competitiveness
4.3.3.1 Balance of payments
4.3.3.1.a Components of the balance of payments
4.3.3.1.b Causes of deficits and surpluses on the current account
4.3.3.1.c Measures to reduce a country’s imbalance on the current account
4.3.3.1.d The significance of global trade imbalances
4.3.3.2 Exchange rates
4.3.3.2.a The distinction between fixed, managed and floating exchange rates
4.3.3.2.b Government intervention in currency markets
4.3.3.2.c Factors influencing floating exchange rates
4.3.3.2.d The distinction between revaluation and appreciation of a currency
4.3.3.2.e The distinction between devaluation and depreciation of a currency
4.3.3.2.f Impact of exchange rate changes
4.3.3.2.g Competitive depreciations/devaluations and their consequences
4.3.3.3 International competitiveness
4.3.3.3.a Measures of international competitiveness
4.3.3.3.b Factors influencing international competitiveness
4.3.3.3.c Measures to increase international competitiveness
4.3.3.3.d The significance of international competitiveness
4.3.4 Poverty and inequality
4.3.4.1 Poverty
4.3.4.1.a The distinction between absolute and relative poverty
4.3.4.1.b Measures of absolute and relative poverty
4.3.4.1.c Causes of changes in absolute and relative poverty
4.3.4.2 Inequality
4.3.4.2.a The distinction between wealth inequality and income inequality
4.3.4.2.b Measurements of inequality
4.3.4.2.c Causes of inequality in income and wealth within countries and between countries
4.3.4.2.d Impact of inequality
4.3.4.2.e The impact of economic change and development on inequality
4.3.4.2.f The significance of the free market economy (capitalism) for inequality
4.3.5 The role of the state in the macroeconomy
4.3.5.1 Public expenditure
4.3.5.1.a The distinction between capital expenditure, current expenditure and transfer payments
4.3.5.1.b Changing size and pattern of public expenditure
4.3.5.1.c Significance of levels of public expenditure
4.3.5.2 Taxation
4.3.5.2.a The distinction between, and examples of, direct and indirect taxes
4.3.5.2.b The distinction between progressive, proportional and regressive taxes
4.3.5.2.c Economic effects of changes in tax rates
4.3.5.3 Public sector borrowing and public sector debt
4.3.5.3.a Fiscal deficits, surpluses and the national debt
4.3.5.3.b Factors influencing the size of fiscal deficits and national debts
4.3.5.3.c The significance of the size of fiscal deficits and national debts
4.3.5.4 Macroeconomic policies
4.3.5.4.a Macroeconomic policies to address problems
4.3.5.4.b Demand-side policies after the 2008 financial crisis
4.3.5.4.c Measures to control TNCs
4.3.5.4.d Impact of policy changes on economies
4.3.5.4.e Problems facing policymakers when applying policies
4.3.6 Growth and development in developing, emerging and developed economies
4.3.6.1 Measures of economic development
4.3.6.1.a Components of the Human Development Index
4.3.6.1.b Advantages and limitations of the HDI
4.3.6.1.c Other measures of development
4.3.6.2 Constraints on growth and development
4.3.6.2.a The impact of economic factors in different countries
4.3.6.2.b The impact of non-economic factors in different countries
4.3.6.3 Measures to promote growth and development
4.3.6.3.a The impact of market-orientated strategies
4.3.6.3.b The impact of interventionist strategies
4.3.6.3.c The impact of other strategies
4.3.6.3.d The role of international institutions