Evaluation
AQA AS-Level Economics 7136
Economic Methodology and the Economic Problem
Price Determination in a Competitive Market
Topic overviewDemand, the demand curve, income and wealthSubstitutes, complements and consumer preferencesPrice elasticity of demand and total revenueThe determinants of price elasticity of demandIncome and cross elasticity of demandThe determinants of supplyPrice elasticity of supplyEquilibrium, disequilibrium and how a market clearsShifts in demand and supply, and the price mechanismThe interrelationship between markets
Production, Costs and Revenue
Perfect Competition, Imperfectly Competitive Markets and Monopoly
The Market Mechanism, Market Failure and Government Intervention
Topic overviewHow markets and prices allocate resourcesThe meaning of market failurePublic goods, private goods and quasi-public goodsPositive and negative externalitiesMerit and demerit goodsMarket imperfectionsAn inequitable distribution of income and wealthIndirect taxes and subsidiesPrice controls, state provision and regulationEvaluating intervention and the mixed economyGovernment failure
The Measurement of Macroeconomic Performance
How the Macroeconomy Works
Topic overviewThe circular flow of incomeThe aggregate demand and aggregate supply curvesWhat shifts short-run and long-run aggregate supplyMacroeconomic equilibrium and economic shocksConsumption and investmentGovernment spending and net exportsThe accelerator, saving and investmentAggregate demand and the level of economic activityThe determinants of aggregate supply
Economic Performance
Topic overviewShort-run and long-run economic growthThe economic cycle and output gapsDemand-side and supply-side shocksMeasuring unemployment and the types of unemploymentThe determinants of employment and policies to reduce unemploymentInflation and deflationThe quantity theory of moneyConsequences of inflation and deflationThe balance of payments on current accountOutput gaps and the growth-inflation conflictReconciling policy objectives in the AD/AS model
Financial Markets and Monetary Policy
Fiscal Policy and Supply-Side Policies
Economic Methodology and the Economic Problem
- 3 subtopics
- 6 things to know
- Papers 1 and 3
What Economic Methodology and the Economic Problem covers
Economic methodology and the economic problem is examined on Papers 1 and 3, and is where the subject starts. It sets out what kind of discipline economics is, the scarcity that forces every choice, and the diagram used to show it.
Where it is assessed
Papers 1 and 3
Markets and market failure, then the synoptic paper.
Check the AQA specification ↗The 3 subtopics
Each one has its own page. AQA AS Economics students sit this topic in the first year.
- Economics as a social science, and positive and normative statementsEconomics as a social science, the difference between positive and normative statements, and the role of value judgements.Open →
- The economic problem, factors of production and opportunity costScarcity and choice, the four factors of production, the three economic decisions, and opportunity cost.Open →
- Production possibility diagramsReading a production possibility diagram, and what points on, inside and beyond the boundary mean.Open →
What you need to know
Answer each one before you reveal it.
Your recallNot started
Numbers
What is a normative statement, and how does it differ from a positive one?
Evaluation
What economic decisions must every society make, and what resources does it use?
Key term
What do capital, enterprise and the environment mean as economic resources?
Key term
Define opportunity cost.
Key term
What does a point inside the production possibility boundary indicate?
Take Economic Methodology and the Economic Problem further
The same content, four other ways.
Commonly confused
Pairs that lose marks when they are blurred together.
Positive statement vs Normative statement
Positive statement: a claim testable against evidence. Normative statement: a value judgement about what ought to happen.
Capital good vs Consumer good
Capital good: an item used to produce other output. Consumer good: an item providing direct satisfaction.
Free-market economy vs Command economy
Free-market economy: resources allocated mainly through prices. Command economy: resources allocated mainly through state planning.
Questions from this topic
Each one with the model answer underneath.
- 1
How is economics classified as a discipline, and what does it study?
Model answer
Economics is classified as a social science. It studies human behaviour and society rather than natural phenomena.
- 2
What methodological features does economics share with natural sciences?
Model answer
Economics shares the use of models, hypothesis testing, and data analysis with natural sciences.
- 3
Why does economics differ from natural sciences despite sharing some methods?
Model answer
Economics differs because controlled experiments are rarely possible and human behaviour is less predictable than natural phenomena.
- 4
What is a positive statement in economics?
Model answer
A positive statement is an objective, factual claim that can be tested and verified or refuted with evidence.
- 5
Give an example of a positive economic statement.
Model answer
'The UK unemployment rate is 4%' – this is factual and can be verified with data.
- 6
What is a normative statement?
Model answer
A normative statement is a subjective claim based on value judgements about what ought to be, which cannot be tested empirically.
What is inside Levo
Six ways to work the same material.
Economic Methodology and the Economic Problem revision questions
- Is Economic Methodology and the Economic Problem examined at AS in AQA Economics?
- Yes. It sits in Papers 1 and 3, which you take in the first year, so it is on the AS paper as well as counting towards the full A level.
- What does Economic Methodology and the Economic Problem cover in AQA AS-Level Economics?
- 3 subtopics: economics as a social science, and positive and normative statements, the economic problem, factors of production and opportunity cost and production possibility diagrams. Each one has its own page with questions and model answers.
- How is Economic Methodology and the Economic Problem organised?
- By the AQA 7136 specification, subtopic by subtopic, so it matches the order you are taught it in.
Every question in Economic Methodology and the Economic Problem, on a schedule.
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