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© Michael Green
OCR GCSE Economics
Unit 1 – How the Market works
Revision Booklet
Name of Student: Teacher:
© Michael Green GCSE Economics 2
What happens when you revise – the Ebbinghaus Forgetting Curve
You should revise a complete unit of this booklet and then review it the key information on the front
page of each unit. Any information you cannot recall you should go over again from your notes.
Beating the forgetting curve!
Review information regularly – once you’ve learned the information you should review it at the
following times:
1. The same day.
2. 24 hours later.
3. 3 days after learning.
4. One week after learning.
5. Two weeks after learning.
6. One month after learning.
© Michael Green GCSE Economics 3
Unit 1: How the Market works
1. What is the economic problem? i. Defining the Economic Problem
What you need to know:
1. Definition of wants and needs
2. Definition of Resources
3. Definition of the 4 factors of production (CELL)
4. Definition of Productivity
5. Definition of Scarcity
6. Definition of Opportunity Cost
7. Definition of Primary, secondary and tertiary sectors
8. Explain what an entrepreneur does
9. Explain what the basic economic problem is
10. Explain how resources are allocated in a free market economy
11. Explain why choices are made
Beating the Ebbinghaus Forgetting Curve
Unit completed (learned for first time)
Same day review
24 hour review
3 day review
1 week review
2 week review
1 month review
Date Completed:
Time after first learnt:
Date completed:
Date completed:
Date completed:
Date completed:
Date completed:
© Michael Green GCSE Economics 4
i. Defining the Economic Problem
1. Definition of wants and needs
2. Definition of Resources
3. Definition of the 4 factors of production (CELL)
4. Definition of Productivity
5. Definition of Scarcity
6. Definition of Opportunity Cost
7. Definition of Primary, secondary and tertiary sectors
8. Explain what an entrepreneur does
9. Explain what the basic economic problem is
© Michael Green GCSE Economics 5
10. Explain how resources are allocated in a free market economy
11. Explain why choices are made
Exam Questions:
1. With the aid of an example, explain what is meant by the:
a. Primary sector?
b. Secondary sector?
c. Tertiary sector? [6]
2. State two factors of production for a fast food restaurant and explain why the cost of
each might rise if competition is increased? [4]
3.
From: CEO
Topic: The options for improving customer experience in our fast food restaurant are:
Option A:
Sending staff on a one-day training course
Option B:
Re-decorating the restaurant
i. Explain using the example above, the concept of opportunity cost. [2]
ii. Explain how this decision demonstrates the basic economic problem. [2]
4. What is the role of an entrepreneur? [2]
5. Explain how resources are allocated in a free market economy. [2]
6. Explain with an example, why firms have to make choices. [2]
© Michael Green GCSE Economics 6
1. What is the economic problem? ii. Approaches to the Economic Problem
What you need to know:
1. Definition of Market
2. Definition of Market Economy
3. Definition of Planned Economy
4. Definition of Mixed Economy
5. Definition of Public Sector, with examples
6. Definition of Private sector, with examples
Beating the Ebbinghaus Forgetting Curve
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24 hour review
3 day review
1 week review
2 week review
1 month review
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Time after first learnt:
Date completed:
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Date completed:
Date completed:
Date completed:
© Michael Green GCSE Economics 7
ii. Approaches to the Economic Problem
1. Definition of Market
2. Definition of Market Economy
3. Definition of Planned Economy
4. Definition of Mixed Economy
5. Definition of Public Sector
Owner Motive
6. Definition of Private sector
Owner Motive
© Michael Green GCSE Economics 8
1. What is the economic problem? iii. Specialisation and the functions of money
What you need to know:
1. Definition of Specialisation
2. Advantages and disadvantages of Specialisation for firms
3. Advantages and disadvantages of Specialisation for workers
4. The four functions of money
Beating the Ebbinghaus Forgetting Curve
Unit completed (learned for first time)
Same day review
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3 day review
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1 month review
Date Completed:
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© Michael Green GCSE Economics 9
iii. Specialisation and the functions of money
1. Definition of Specialisation
2. Advantages and disadvantages of Specialisation for firms
Advantages Disadvantages
3. Advantages and disadvantages of Specialisation for workers
Advantages Disadvantages
4. The four functions of money
1.
2.
3.
4.
Exam Question – 8 marks
Nottingham Theatre employs a range of workers, such as actors, make-up artists and
cleaning staff.
Do the benefits of specialisation outweigh the costs for Nottingham Theatre? Give reasons
for your answer.
© Michael Green GCSE Economics 10
2. What are competitive markets? i. Competitive Markets
What you need to know:
1. Definition of a Competitive Market
2. Ways in which firms can compete
3. Advantages and disadvantages of Competitive markets for consumers
4. Advantages and disadvantages of Competitive markets for consumers
Beating the Ebbinghaus Forgetting Curve
Unit completed (learned for first time)
Same day review
24 hour review
3 day review
1 week review
2 week review
1 month review
Date Completed:
Time after first learnt:
Date completed:
Date completed:
Date completed:
Date completed:
Date completed:
© Michael Green GCSE Economics 11
i. Competitive Markets
1. Definition of a Competitive Market
2. Ways in which firms can compete
3. Advantages and disadvantages of Competitive markets for consumers
Advantages Disadvantages
4. Advantages and disadvantages of Competitive markets for consumers
Advantages Disadvantages
Exam Questions
1. Discuss the impact on Perfect Pizzas of a new pizza restaurant opening in town. [8]
2. To what extent will the citizens of New Brunswick benefit from an increase in the
number of supermarkets in town? [8]
© Michael Green GCSE Economics 12
2. What are competitive markets? ii. Monopoly and Monopoly Power
What you need to know:
1. Definition of Monopoly
2. Definition of Monopoly power
3. Causes of monopoly power
4. Advantages of a monopoly for consumers
5. Disadvantages of a monopoly for consumers
5. Advantages of being a monopoly for the firm
6. Disadvantages of being a monopoly for the firm
Beating the Ebbinghaus Forgetting Curve
Unit completed (learned for first time)
Same day review
24 hour review
3 day review
1 week review
2 week review
1 month review
Date Completed:
Time after first learnt:
Date completed:
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Date completed:
Date completed:
© Michael Green GCSE Economics 13
ii. Monopoly and Monopoly Power
1. Definition of Monopoly
2. Definition of Monopoly power
3. Causes of Monopoly power
4. Advantages of a monopoly for consumers
5. Disadvantages of a monopoly for consumers
5. Advantages of being a monopoly for the firm
6. Disadvantages of being a monopoly for the firm
© Michael Green GCSE Economics 14
Exam Questions
1. Explain two ways in which a firm can achieve monopoly power. [4]
2. Assess the advantages and disadvantages to consumers of a firm having monopoly
power. [8]
3. Discuss the extent to which monopoly power can benefit a big trainer firm such as
Nike? [8]
© Michael Green GCSE Economics 15
2. What are competitive markets? iii. Demand and Supply
What you need to know:
1. Definition of Demand
2. Explain why demand curve slopes downwards
3. Identify factors that move demand curve (PASIFIC)
4. Definition of Supply
5. Explain why supply curve slopes upwards
6. Identify factors that move supply curve (PINTSWC)
Beating the Ebbinghaus Forgetting Curve
Unit completed (learned for first time)
Same day review
24 hour review
3 day review
1 week review
2 week review
1 month review
Date Completed:
Time after first learnt:
Date completed:
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© Michael Green GCSE Economics 16
iii. Demand and Supply
1. Definition of Demand
2. Explain why demand curve slopes downwards
3. Identify factors that move demand curve (PASIFIC)
P F
A I
S C
I
4. Definition of Supply
5. Explain why supply curve slopes upwards
6. Identify factors that move supply curve (PINTSWC)
P S
I W
N C
T
© Michael Green GCSE Economics 17
Exam Questions
1. Discuss factors which could cause the price of children’s bikes to rise. [8]
2. Explain two factors which would cause the supply of cereals to fall. [4]
3. Discuss the factors which are likely to affect the demand for holiday
accommodation in a tourist area such as Tunisia in Africa. [8]
© Michael Green GCSE Economics 18
2. What are competitive markets?
iv. Price Elasticity of Demand and Price Elasticity of Supply
What you need to know:
1. Definition of Price Elasticity of Demand (PED)
2. Formula for calculating PED
3. Types of PED, with numerical values and diagrams
4. Factors that influence PED
5. Definition of Price Elasticity of Supply (PES)
6. Formula for calculating PES
7. Types of PES, with numerical values
8. Factors that influence PES
Beating the Ebbinghaus Forgetting Curve
Unit completed (learned for first time)
Same day review
24 hour review
3 day review
1 week review
2 week review
1 month review
Date Completed:
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Date completed:
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© Michael Green GCSE Economics 19
iv. Price Elasticity of Demand
1. Definition of Price Elasticity of Demand (PED)
2. Formula for calculating PED
3. Types of PED, with numerical values and diagrams
Type Numerical Value Diagram
4. Factors that influence PED
© Michael Green GCSE Economics 20
iv. Price Elasticity of Supply
5. Definition of Price Elasticity of Supply (PES)
6. Formula for calculating PES
7. Types of PES, with numerical values
Type Numerical Value
8. Factors that influence PES
© Michael Green GCSE Economics 21
Exam Questions
Fill the gaps using the words in the list:
no quantity price small
1. Price elastic supply is when the increase in ……………………… leads to a ………………………
change in supply.
2. Draw a label a perfectly elastic supply curve on the diagram below.
State what has happened to price and quantity as a result of the increase in demand.
© Michael Green GCSE Economics 22
2. What are competitive markets?
v. Minimum and Maximum Price
What you need to know:
1. Definition of Minimum price
2. Diagram showing minimum price
3. Definition of Maximum price
4. Diagram showing maximum price
Beating the Ebbinghaus Forgetting Curve
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3 day review
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© Michael Green GCSE Economics 23
v. Minimum and Maximum Price
1. Definition of Minimum price
2. Diagram showing minimum price
3. Definition of Maximum price
4. Diagram showing maximum price
Exam Questions
1. Should the government put a minimum price on alcohol? Justify your answer. [8]
© Michael Green GCSE Economics 24
Unit 1: How the Market works
3. How do firms operate in competitive markets?
i. Costs, revenues and profit
What you need to know:
1. Definition of fixed costs, variable costs and total costs
2. Definition (and formula) of total revenue and average revenue
3. Definition of output
4. Definition (and formula) of profit
Beating the Ebbinghaus Forgetting Curve
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© Michael Green GCSE Economics 25
i. Costs, revenues and profit
1. Definition of fixed costs, variable costs and total costs
Fixed Costs
Variable Costs
Total Costs
2. Definition (and formula) of total revenue and average revenue
Total Revenue
Average Revenue
3. Definition of output
4. Definition (and formula) of profit
Exam Questions
David Smith runs a company which rents out boats for fishing trips. Last weekend he hired
out 3 boats.
Total revenue £600
Total Cost £240
1. Calculate the profit made by David renting out his boats.
2. Calculate his average revenue.
© Michael Green GCSE Economics 26
3. How do firms operate in competitive markets?
ii. Production and Productivity
What you need to know:
1. Definition of Production
2. Definition of Productivity
3. Ways productivity can be increased
4. Advantages of increasing productivity
Beating the Ebbinghaus Forgetting Curve
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1 month review
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© Michael Green GCSE Economics 27
ii. Production and Productivity
1. Definition of Production
2. Definition of Productivity
3. Ways productivity can be increased
4. Advantages of increasing productivity
Exam Questions
To what extent could an increase in productivity help a firm to compete more successfully?
Give reasons for your answer. [8]
© Michael Green GCSE Economics 28
3. How do firms operate in competitive markets?
iii. Growth of Firms
What you need to know:
1. Definition of internal growth and external growth
2. Definition of merger and takeover
3. Definition of horizontal and vertical integration
4. The advantages and disadvantages of growth
Beating the Ebbinghaus Forgetting Curve
Unit completed (learned for first time)
Same day review
24 hour review
3 day review
1 week review
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1 month review
Date Completed:
Time after first learnt:
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© Michael Green GCSE Economics 29
iii. Growth of Firms
1. Definition of internal growth and external growth
Internal growth
External growth
2. Definition of merger and takeover
Merger
Takeover
3. Definition of horizontal and vertical integration
Horizontal integration
Vertical integration
4. The advantages and disadvantages of growth
Advantages Disadvantages
Exam Question
Sharpe’s ltd is a manufacturing company. It’s owner, Tom Sharpe, is keen to grow the firm in
the next 5 years.
1. Do you agree that the benefits of growth to Sharpe’s ltd exceed the costs?
© Michael Green GCSE Economics 30
3. How do firms operate in competitive markets?
iv. Economies and Diseconomies of Scale
What you need to know:
1. Definition of (Internal) Economies of scale
2. Types of Internal Economies of Scale
3. Definition of External Economies of scale
4. Causes of Diseconomies of Scale
Beating the Ebbinghaus Forgetting Curve
Unit completed (learned for first time)
Same day review
24 hour review
3 day review
1 week review
2 week review
1 month review
Date Completed:
Time after first learnt:
Date completed:
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© Michael Green GCSE Economics 31
iv. Economies and Diseconomies of Scale
1. Definition of (Internal) Economies of scale
2. Types of Internal Economies of Scale
Really Try
Fun Making
Mums Pies
3. Definition of External Economies of scale
4. Causes of Diseconomies of Scale
C
C
C
Exam Questions
1. State and explain two types of economies of scale that a supermarket could gain. [8]
© Michael Green GCSE Economics 32
3. How do firms operate in competitive markets?
v. Rewards for Labour
What you need to know:
1. Definition of wage and salary
2. Definition of gross and net income
3. Definition of nominal and real income
4. The Labour market diagram
5. Factors that cause shifts in supply of labour
6. Factors that cause shifts in demand for labour
Beating the Ebbinghaus Forgetting Curve
Unit completed (learned for first time)
Same day review
24 hour review
3 day review
1 week review
2 week review
1 month review
Date Completed:
Time after first learnt:
Date completed:
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Date completed:
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© Michael Green GCSE Economics 33
v. Rewards for Labour
1. Definition of wage and salary
2. Definition of gross and net income
3. Definition of nominal and real income
4. The Labour market diagram
5. Factors that cause shifts in supply of labour
6. Factors that cause shifts in demand for labour
Exam Question
Should skilled workers be paid more than unskilled workers? Give reasons for your answer.
[8]
© Michael Green GCSE Economics 34
3. How do firms operate in competitive markets?
vi. The National Minimum wage
What you need to know:
1. Definition of the national minimum wage (NMW)
2. Arguments for the NMW
3. Arguments against the NMW
Beating the Ebbinghaus Forgetting Curve
Unit completed (learned for first time)
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Date Completed:
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© Michael Green GCSE Economics 35
vi. The National Minimum wage
1. Definition of the national minimum wage (NMW)
2. Arguments for the NMW
3. Arguments against the NMW
Exam Questions
1. Using a diagram, explain the impact of an increase in the National Minimum Wage
on unemployment. [6]
2. Do you think the National Minimum wage is a good idea? Give reasons for your
answer. [8]
Sally’s café is a small business in South Wales. She employees two full time staff and four
part-time staff to work on Saturdays.
3. Discuss the impact of the National Minimum Wage on the profits of a business like
Sally’s cafe. [8]
