Theme 2 – The Wider Economic Environment

• Contextual Analysis

Business Growth and Competitive Advantage

• a) Growth
• b) Methods of growth
• c) Research and development (R&D) and innovation
• d) How the digital economy affects markets and firms
• e) How small firms compete

Firms, Consumers and Elasticities of Demand

• a) Price elasticity of demand (PED)
• b) Competing on price
• c) Types of non-price competition
• d) Income elasticity of demand (YED)

Productive Efficiency

• a) Productivity
• b) Capacity utilisation
• c) Efficiency and competitiveness using lean production
• d) Impact on costs and sales revenue

Life in a Global Economy

• a) Globalisation
• b) Developed, emerging and developing economies
• c) International trade
• d) Exchange rates

The Economic Cycle

• a) The economic cycle
• b) Circular flow of income, expenditure and output
• c) Inflation
• d) Employment and unemployment

Introduction to Macroeconomic Policy

• a) Possible macroeconomic objectives
• b) Policy instruments
• c) Potential policy conflicts and trade-offs