IGCSE Economics O Level

Table of contents

Assessment

Paper 1 (45 minutes) (30%)

Multiple Choice

30 marks

Candidates answer all 30 questions

Externally assessed

Paper 2 (2 hours 15 minutes) (70%)

Structured Questions

90 marks

Candidates answer one compulsory question and three questions from a choice of four.

Externally assessed

Chapter 3: Opportunity cost

Define opportunity cost: The (next) best alternative / choice forgone / sacrificed

Chapter 7: Demand

To save time and for the sake of clarity, economists also often draw demand curves as straight lines but they are still referred to as curves!

Chapter 13: Market economic system

Market can be divided into

• Private sector

• Public sector

Chapter 14: Market Failure

The consequences of market failure:

• market failure exists when the production or consumption of goods and services in a market is not efficient

• overconsumption of demerit goods and goods with external costs leading to an overall misallocation of resources e.g. overconsumption of cigarettes, fossil fuels 

• underconsumption of merit goods and goods with external benefits e.g. education, healthcare

• non-supply of public goods e.g. defence 

• abuse of monopoly power resulting in higher prices reducing affordability / choice

• factor immobility resulting in shortages and surpluses causing unemployment resulting in lower income / poverty

Chapter 16: Money And Bank

Functions of money:

• a medium of exchange to buy goods and services / to trade 

• a measure of value / unit of account to measure how much a product is worth

• a store of value to allow people to save 

• a method of deferred payment for borrowing and lending

2 ways to borrow money from bank

• Overdraft

• Loan

Chapter 17: Household

Average propensity to consume (APC) = Consumption /  Disposable income

Chapter 26: Fiscal Policy

Types of tax:

• Direct

• Indirect (1)

• Progressive 

• Proportional 

• Regressive

Chapter 30: Employment and unemployment

Possible causes of an increase in the size of a country’s labour force.

• Change in the birth rate rise will mean more people of working age in the long run / fall will enable more parents to be in the labour force.

• Immigration; many immigrants are of working age.

• Rise in retirement age; people will work for longer.

• Fall in school leaving age; people will be in education for a shorter period.

• Fall in the death rate / rise in life expectancy; fewer people dying before reaching retirement age.

• Changes in social culture; allowing more women to work.

• Increase in size of population of working age.

• Rise in wage levels attracts people to re-enter the labour market.

Chapter 31: Inflation & Deflation

Inflation is the increase in the average price level of goods and services over time. 

Example of inflation: 

Let’s say you enjoy a scoop of ice cream that used to cost $2. Now, when you go to the ice cream shop, the same scoop costs $3. You need more money to buy the same ice cream because of inflatio

Discuss why some countries may experience lower inflation in the future and some may not.

Why some might:

•  advances in technology may reduce costs of production

•  increases in education and healthcare could raise

• labour productivity

•  globalisation may increase international competition

•  trade union power may fall, lowering wage increases

•  successful government policy measures e.g. reducing demand

Why some might not:

•  consumers may become optimistic and spend more

•  governments may increase their spending

•  the rate of interest may fall

•  total demand may increase

•  raw materials may run out

•  rising cost of energy and rising food prices.

Chapter 34: Population

Why death rates may vary between countries.

Possible reason:

•  income / standard of living

•  healthcare

•  education

•  nutrition

•  lifestyles / suicide rates

•  average age

•  spread of Covid / infectious diseases

•  war / conflict

•  natural disasters

•  air pollution / water pollution

•  conditions of work

•  level of crime

Chapter 39: Current account of balance of payments

How an increase in labour productivity in a  country can increase a surplus on the current account of its balance of payments.

• Output per worker (hour) increases may reduce average cost of production lower prices may increase the quality of exports.

• These changes may increase international competitiveness of exports / make exports cheaper demand for exports may increase export revenue may rise.

• Higher relative prices of imports lower relative quality of imports these changes may decrease international competitiveness of imports demand for imports may decrease import expenditure may fall.

• Output increases allowing more exports and less imports.

Text Book

Economics Paper 1 (MCQ) Quiz