25YEARSEndorsed for learner supportCambridgeIGCSE®and 0 LevelEconomicsSecond editionPaul HoangMargaret DucieHODDEREDUCATIONEvery effort has been made to trace all copyright holders,but if any have been inadvertentlyoverlooked the publishers will be pleased to make the necessary arrangements at the firstopportunity.Although every effort has been made to ensure that website addresses are correct at time of goingto press,Hodder Education cannot be held responsible for the content of amy website mentionedin this book.It is sometimes possible to find a relocated web page by typing in the address of thehome page for a website in the URL window of your browser.Hachette UK's policy is to use papers that are natural,renewable and recyclable products and madefrom wood grown in sustainable forests.The logging and manufacturing processes are expected toconform to the environmental regulations of the country of origin.Orders:please contact Bookpoint Ltd,130 Milton Park,Abingdon,Oxon 0X14 4SB.Telephone:(44)01235827720.Fax:(44)01235400454.Lines are open9.00-5.00,Monday to5 aturday,with a 24-hour message answering service.Visit our website at www.hoddereducation.comIGCSE is a registered trademark.The questions,example answers,marks awarded and/or comments that appear in this book werewritten by the authors.In examination,the way marks would be awarded to answers like these maybe different.Paul Hoang and Margaret Ducie 2018First published in 2015 byHodder EducationAn Hachette UK CompanyCarmelite House50 Victoria EmbankmentLondon EC4Y ODZThis second edition published 2018Impression number 5 4 3 2 1Year20222021202020192018All rights reserved.Apart from any use permitted under UK copyright law,no part of thispublication may be reproduced or transmitted in any form or by any means,electronic ormechanical,including photocopying and recording,or held within any information storage andretrieval system,without permission in writing from the publisher or under licence from theCopyright Licensing Agency Limited.Further details of such licences(for reprographic reproduction)may be obtained from the Copyright Licensing Agency Limited,Barnard's Inn,86 Fetter Lane,London EC4A 1EN.Cover photo Shutterstock/JianghaistudioTypeset in IndiaPrinted and bound by Hobbs the Printers Ltd,Totton,Hampshire S040 3WXA catalogue record for this title is available from the British LibraryISBN97815104212882ContentsSECTION 1 The basic economic problem1The nature of the economic problem5The factors of production3Opportunity cost94Production possibility curveSECTION 2 The allocation of resources5Microeconomics and macroeconomics136The role of markets in allocating resourcesDemand178Supply199 Price determination2110 Price changes2311 Price elasticity of demand (PED)2512 Price elasticity of supply (PES)2813 Market economic system3014 Market failure3315 Mixed economic system36SECTION 3Microeconomic decision makers16 Money and banking3817 Households4018 Workers4219 Trade unions4520 Firms4821 Firms and production5022 Firms'costs,revenue and objectives5223 Market structure55SECTION 4 Government and the macroeconomy24 The role of government5725 The macroeconomic aims of government5926 Fiscal policy6127 Monetary policy6428 Supply-side policy6629 Economic growth6830 Employment and unemployment7131 Inflation and deflation73SECTION 5 Economic development32 Living standards7633 Poverty8034 Population8235 Differences in economic development between countries86SECTION 6 International trade and globalisation36 International specialisation8837 Globalisation,free trade and protection9038 Foreign exchange rates9239 Current account of balance of payments94Photocopying prohibitedCambridge IGCSE and O Level Economics 2nd edition Workbook3