Edexcel Theme 1: Introduction to Markets and Market Failure

Economics as a social science, positive and normative statements, the economic problem, production possibility frontiers

• 1.1.1 Economics as a social science
• 1.1.2 Positive and normative economic statements
• 1.1.3 The economic problem
• 1.1.4 Production possibility frontiers
• 1.1.5 Specialisation and the division of labour
• 1.1.6 Free market economies, mixed economy and command economy

Rational decision making, demand, price elasticity, supply, price determination, consumer surplus

• 1.2.1 Rational decision making
• 1.2.2 Demand
• 1.2.3 Price, income and cross elasticities of demand
• 1.2.4 Supply
• 1.2.5 Elasticity of supply
• 1.2.6 Price determination
• 1.2.7 Price mechanism
• 1.2.8 Consumer and producer surplus
• 1.2.9 Indirect taxes and subsidies
• 1.2.10 Alternative views of consumer behaviour

Types of market failure, externalities, public goods, information gaps

• 1.3.1 Types of market failure
• 1.3.2 Externalities
• 1.3.3 Public goods
• 1.3.4 Information gaps

Government intervention in markets, government failure

• 1.4.1 Government intervention in markets
• 1.4.2 Government failure