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UPDATED TO 2023-2025 SYLLABUS

CAIE IGCSE
ECONOMICS
SUMMARIZED NOTES ON THE THEORY SYLLABUS
Prepared for Mohammed for personal use only.
CAIE IGCSE ECONOMICS

Prices of other goods/services

1. The Basic Economic Cost of factors of production
Global factors
Problem Business optimism
Technology advancement
1.1. The Factors of Production
3.3. Factors Affecting PEDs
“Caroline Enjoys Licking Lollipops”
“People Prefer Snowy Nights”
C - Capital
E - Entrepreneurship P-Period of time
L - Land P-Proportion of Income spent
L - Labour S-Substitute goods
N-Necessity of product

2. The Allocation of 3.4. Factors Affecting PES

Resources “Sally Sings Frankies Album Tonight”

2.1. Microeconomics: Focuses On Supply available to meet demand

Spare production capacity availability
“MICRO” Factor substitution availability
Availability of resources
M - Markets Time
I - Individuals
C - Consumers 3.5. Market Failure
R - Resources
O - Output Humans Usually Encounter Many Poisonous Pests
2.2. Macroeconomics: Focuses On Harmful goods may be produced (e.g. drugs)‎
Unemployment – may become capital intensive
“MACRO-ECO” Environmental damages
Monopolies dominate price
M - Macro (whole economy) Only Profitable goods produced
A - Aggregate (Demand & Supply) Public goods not provided
C - Country
R - Resources
O - Output 3.6. Advantages of a Market System
E - Economic indicators
C - Government policies “I Enjoy Eating Ice Cream"
O - Overall
Incentive to produce goods consumers want (based
solely on consumer demand)
3. How Markets Work Encourages producers to Conserve resources
Economic freedom
Incentive to acquire new Skills
3.1. Factors Affecting Demand Competition makes business more effective

Producing Paper Is So Incredibly Painful

4. Money and Finance
Price
Preferences
Income Available
4.1. Functions of Money
Substitute/Complementary Goods
Interest rates “Sunny Mornings Unleash Smiles”
Population

3.2. Factors Affecting Supply

Pizza Could Get Bad Tomorrow

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CAIE IGCSE ECONOMICS

Store of value Craft unions

Medium of exchange Industrial unions
Unit of account Non-manual unions/Professional unions
Standard for deferred payment General unions

4.2. Characteristics of Good Money 5.3. Different Industrial Actions

“Dolphins Swim Playfully Amidst Seashells” “Skies Watch Over Greenfields
Divisibility Strike
Scarcity Work to rule
Portability Overtime ban
Acceptability‎ Go slow
Stability
5.4. Advantages of Trade Unions
4.3. Types of Lending from Commercial
Banks “I Met Kind Bob”
Maintain employment/enhance job security
“My Lovely Cat Obeys" Keep pay higher
Bring about minimum working standard
Mortgages
Improvement in health and society
Loans
Credit cards
Overdraft 5.5. Disadvantages of Trade Unions
4.4. Functions of the Central Bank “Wise Wizards Find Loot”
Workers made redundant
"Some People Love Big Sunny Meadows." Workers will need to pay union membership fees
Fashions change very quickly
Setting interest rates
Lack of flexibility in working practices
Printing notes and minting coins
Lender of last resort
Banker for commercial banks and government
Supervising monetary policy
6. Growth of Firms
Manage international financial system
6.1. Measure a Firm's Size
5. Role of Trade Unions "Many Owls Nest At Night."
Market share
5.1. Functions of Trade Unions Organization
Number of employees
Neglecting Development Is Common In Dictators Amount of capital employed
Negotiating wages and other non-wage benefits
Defending employee rights and jobs
Improve pay and other benefits
7. Economies of Scale
Improving working Conditions
Increase worker participation in business decisions 7.1. Economies of Scale
Develop skills of union members
"Tigers Roam Freely in Meadows."
5.2. Types of Trade Unions Technical economies
Risk-bearing economies
Curiosity Inspires New Growth Financial economics
Marketing economies

7.2. Diseconomies of Scale

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CAIE IGCSE ECONOMICS
Always Learn More
Agglomeration diseconomies 8.6. Competition Policy
Labour diseconomies
Management diseconomies Future-Focused Professionals Succeed
Fines on firms who abuse power
8. Competition Forcing oligopolies and monopolies to break up
Public ownership of monopolies
Setting maximum price levels
8.1. Firms Competition
“Mangoes Are Incredibly Iresistibly, Sweet!” 9. Role of Government
Maximize profits ‎ 9.1. Role of the Government in an
Achieve product superiority ‎
Increase the number of customers Economy as a Producer
Increase sales revenue
Expand Share of the total market sales Smiling Children Playfully Splash
Supply merit goods
8.2. Disadvantages of Monopolies and Control monopolies
Oligopolies Produce essential goods and services
Supply public goods
“Lemonade Supports On Hot Rays."
9.2. Main Macroeconomic Objectives
Lower quality products
Supply less and charge higher prices Lemonade Helps Energize Bodies
Offer less Consumer choice
Higher production costs Low and stable rate of inflation
Restrict competition using barrier High and stable level of employment
Encourage economic growth
8.3. Pricing Strategies Balance of international transactions (should be stable)

Penguins Enjoy Playing Marvelous Pranks." 9.3. Supply Side Policies

Penetration pricing Every Company Should Deliver Free Tasty
Expansion pricing
Price leadership
Lunches
Market skimming
Education and training
Predatory pricing
Competition policy
Subsidies/grants
8.4. Natural Barriers to Entry Deregulation ‎
Free trade agreement
Little Ants Eat Cookies." Tax incentives subsidies
Labour market regulations
Large customer base
Advance product or patented processes
Equipment – can’t afford 10. Taxation
Costs saving from large scale production
10.1. Reasons to Tax
8.5. Artificial Barriers to Entry
Fluttering Doves Roam at Day
Playful Squirrels Roam
Finance public expenditure
Predatory pricing strategies used Discourage certain activities ‎
Preventing Suppliers from selling materials Redistribute income from rich to poor
Forcing Retailers to stock only their products Discourage the import of goods

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CAIE IGCSE ECONOMICS

E-Economy -Government administrators should be able

10.2. Direct Taxes to collect taxes without spending too much time or
money.
People Plan Chess, Choose Tactics S-Simplicity - Tax laws should be simple and easily
understood.
Personal income tax
C- Certainty - It should be clear to the taxpayer when the
Payroll taxes tax is due, how much is due, and how it should be paid.
Corporation taxes E -Equitability - The tax system should be fair so that no
Capital gains tax one bears too much or too little of the tax burden.
Transfer tax

10.3. Indirect Tax 11. Employment and

Ants Underneath The Eucalyptus: Unemployment
Ad valorem taxes
User charges
11.1. Personal and Economic
Tariffs ‎ Consequences of Inflation
Excise duty
Roller Coasters Bring Intense Rides
10.4. Advantages of Regulations
Reduces purchasing power
Buy Apples in Limits Causes unemployment
Boosts tax revenues
Balance between interests of firms and consumers Increases government spending
Allows government to regulate firms ‎ Reduces real value of loans and savings
Improve efficiency and redistribute income Decrease in company profits
Limit the effect of externalities ‎
11.2. Deflation
10.5. Reasons to Subsidies
Faithful Friends Enjoy Evening Talks"
Every Person Enjoys Pancakes
Firms make less revenues
Encourage the production of goods of natural Firms produce less as less demanded
importance Employers hire few workers
Provide support for industries in decline ‎ Expectation of prices to fall, people stop spending
Encourage the development of new products and Things become cheaper
industries
Protect domestic industries against foreign competition ‎ 11.3. Consequences of Deflation
10.6. Companies Nationalised in the Rainy Days Bring Frogs Inside
Past Reduce workforce
Deep recession
Making Friends Creates Positivity Bankruptcy
Firms make less profit
Maintain a public service
Incomes fall in households
For safety
Control monopolies
Protect employment 11.4. Different types of Unemployment
10.7. Public Sector Firms Privatised Clean Surfaces Fight Germs

Jack Carefully Swallows Raspberries"

Joint ventures with private firms
Contracting out
Sale of public sector assets ‎
Removing barriers to competition

10.8. Features of a Good Tax

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CAIE IGCSE ECONOMICS

Cyclical
Structural
Frictional
Seasonal

11.5. Personal Costs of Unemployment

Lost Dogs Discovered
Loss of income
Deskill of unemployment
Depressed and ill; strain on family

11.6. Economic Costs of Unemployment

Friends Together Win
Fewer goods and services are produced
Tax revenues lower
Welfare payments rise

11.7. Policies to Alleviate Poverty

Father Takes Five Delicious Eclairs Regularly

Food aid
Technological aid
Financial aid
Debt relief
Economic advice
Removing barriers to overseas trade

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CAIE IGCSE
Economics

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