Top 200 Vocabulary for JC 1 H2 Economics | Scarcity, Demand, Supply, Market Failure and Policies Explained

JC1 H2 Economics vocabulary begins with scarcity, opportunity cost, demand, supply and the price mechanism. These 200 important Economics terms explain how Singapore junior college students can read a case study, understand a market diagram and build precise essay arguments. The guide is organised around the key themes of the SEAB 2027 H2 Economics syllabus 9570.

You do not have to learn all 200 words at once. Some terms are useful in early JC1 microeconomics; others become more important when you study macroeconomics and international trade. Read the cluster that matches your class, test the words against an everyday decision and practise writing an economic explanation with them.

• Start with: scarcity, opportunity cost, demand, supply, equilibrium, elasticity and externalities.
• Then explore: firms, market failure, government policy, GDP, inflation, unemployment and globalisation.
• Remember: this is an independent 200-term teaching glossary, not an officially ranked SEAB search-frequency or examination word list.

H2 Economics in 2027: three big themes

SEAB organises the 9570 syllabus around the central economic problem, markets, and the national and international economy. Across these topics, students are expected to analyse decisions from the perspectives of consumers, producers and governments, and to evaluate the consequences and trade-offs. A clear economics answer does not simply mention a policy. It explains the mechanism through which the policy could change behaviour and identifies conditions that may alter the outcome.

Jump to the 200 Economics vocabulary words

1. Scarcity, choice and economic thinking (words 1–20)
2. Demand, supply and price signals (words 21–40)
3. Elasticity, benefits and price intervention (words 41–60)
4. Firms, costs and market structures (words 61–80)
5. Efficiency, market failure and externalities (words 81–100)
6. Government intervention and equity (words 101–120)
7. National income and macroeconomic models (words 121–140)
8. Macroeconomic objectives and indicators (words 141–160)
9. Macroeconomic policies and Singapore (words 161–180)
10. Globalisation, trade and evaluation (words 181–200)

1. Scarcity, choice and economic thinking: words 1–20

Every economics question begins with scarcity: there are more desirable uses for resources than resources available. An explanation should name the forgone alternative.

1. Economics. The social science studying choices made with limited resources and competing uses.
2. Scarcity. The condition of limited resources relative to people’s wants.
3. Choice. Selection of one option rather than another when resources are limited.
4. Opportunity cost. The value of the next-best alternative forgone when choosing.
5. Trade-off. A sacrifice accepted to gain something else.
6. Resource allocation. Deciding how scarce resources are distributed among alternative uses.
7. Factors of production. Land, labour, capital and enterprise used to produce goods and services.
8. Land. Natural resources used in production, not merely plots of property.
9. Labour. Human physical and mental effort used in production.
10. Capital. Man-made productive resources such as machinery and equipment.
11. Enterprise. The organisation and risk-taking used to combine productive resources.
12. Consumer. An economic agent demanding goods or services to satisfy wants.
13. Producer. An economic agent supplying goods or services for others to use.
14. Government. An economic agent making public decisions and setting rules and policies.
15. Rational decision-making. Comparing expected benefits, costs and constraints to pursue an objective.
16. Marginal benefit. The extra benefit from one additional unit or small change.
17. Marginal cost. The extra cost arising from one additional unit or small change.
18. Marginalist principle. Choosing a small additional action by comparing its marginal benefit and cost.
19. Production possibility curve. A diagram showing maximum feasible output combinations using given resources and technology.
20. Productive capacity. The highest potential production an economy can sustain with its resources and technology.

2. Demand, supply and price signals: words 21–40

Movement along a curve and shifting the whole curve are different events. State whether the good’s own price changed or another determinant changed.

21. Market. An arrangement through which buyers and sellers exchange goods or services.
22. Price mechanism. The use of prices to coordinate decisions and allocate scarce resources.
23. Demand. The quantities buyers are willing and able to purchase at different prices.
24. Quantity demanded. The amount bought at one specified price, other factors held constant.
25. Law of demand. The usual inverse relation between a good’s price and quantity demanded, ceteris paribus.
26. Supply. The quantities producers are willing and able to offer at different prices.
27. Quantity supplied. The amount offered for sale at a particular price.
28. Law of supply. The usual positive relation between price and quantity supplied, other factors unchanged.
29. Demand curve. A diagram linking market price to quantity demanded.
30. Supply curve. A diagram linking market price to quantity supplied.
31. Change in demand. A shift of the demand curve caused by a non-price determinant.
32. Change in quantity demanded. A movement along an unchanged demand curve due to own-price change.
33. Change in supply. A shift of the supply curve caused by a non-price determinant.
34. Change in quantity supplied. A movement along supply as the good’s own price changes.
35. Market equilibrium. A position where quantity demanded equals quantity supplied.
36. Equilibrium price. The price at which market quantity demanded equals quantity supplied.
37. Equilibrium quantity. The quantity traded at market equilibrium.
38. Shortage. A situation where quantity demanded exceeds quantity supplied at the stated price.
39. Surplus. A situation where quantity supplied exceeds quantity demanded at the stated price.
40. Ceteris paribus. An assumption meaning all other relevant factors are held constant.

3. Elasticity, benefits and price intervention: words 41–60

Elasticity measures responsiveness, not simply whether demand rises or falls. Elasticity can influence revenue and the effect of policy.

41. Price elasticity of demand. Responsiveness of quantity demanded to a change in the good’s own price.
42. Price elasticity of supply. Responsiveness of quantity supplied to a change in the good’s own price.
43. Income elasticity of demand. Responsiveness of demand to a change in consumers’ income.
44. Cross elasticity of demand. Responsiveness of demand for one good to another good’s price.
45. Price elastic demand. A condition where the percentage quantity response exceeds the percentage price change.
46. Price inelastic demand. A condition where the percentage quantity response is smaller than the percentage price change.
47. Unit elastic demand. A condition where the percentage quantity response equals the percentage price change.
48. Normal good. A good whose demand rises as income rises, other conditions unchanged.
49. Inferior good. A good whose demand falls as income rises, other conditions unchanged.
50. Substitute goods. Goods that can replace one another in consumption.
51. Complementary goods. Goods often consumed together.
52. Consumer surplus. The difference between buyers’ willingness to pay and the price paid.
53. Producer surplus. The difference between the price received and minimum acceptable supply price.
54. Total revenue. The money a firm receives from sales, equal to price times quantity.
55. Total expenditure. The money consumers spend, equal to price times quantity purchased.
56. Indirect tax. A tax imposed on spending, production or sale of goods and services.
57. Subsidy. Government financial support reducing effective production cost or consumer price.
58. Price ceiling. A legal maximum permitted price, potentially creating shortages if binding.
59. Price floor. A legal minimum permitted price, potentially creating surpluses if binding.
60. Quota. A limit placed on the amount of a good that may be produced, sold or imported.

4. Firms, costs and market structures: words 61–80

Firms face costs, competition and uncertain information. Profit is a difference, not a synonym for sales revenue.

61. Firm. A producing organisation that combines resources to provide goods or services.
62. Profit. Total revenue minus total cost over a specified period.
63. Profit maximisation. Choosing output to achieve the greatest feasible difference between revenue and cost.
64. Total cost. The sum of costs incurred in production.
65. Fixed cost. A cost unchanged with output in the short run.
66. Variable cost. A cost that changes with the quantity produced.
67. Average cost. Total cost divided by quantity of output.
68. Marginal cost of production. The increase in total cost from one extra unit of output.
69. Marginal revenue. The additional revenue earned from selling one more unit.
70. Average revenue. Total revenue divided by units sold.
71. Economies of scale. Falling long-run average cost as the scale of production increases.
72. Diseconomies of scale. Rising long-run average cost as the scale of production expands.
73. Internal economies of scale. Cost advantages arising from growth within an individual firm.
74. External economies of scale. Cost advantages arising from growth of the surrounding industry.
75. Perfect competition. An idealised market with many sellers offering identical products and free entry.
76. Monopolistic competition. A market with many firms offering differentiated products.
77. Oligopoly. A market dominated by a small number of interdependent firms.
78. Monopoly. A market with one seller of a good without close substitutes, as defined.
79. Barriers to entry. Obstacles making it difficult for new firms to enter a market.
80. Product differentiation. Making a product distinct in characteristics, branding or perceived value.

5. Efficiency, market failure and externalities: words 81–100

Market failure is a comparison between private incentives and social outcomes. State whose costs and benefits are counted.

81. Allocative efficiency. A situation where resources produce the goods and services society values most at the margin.
82. Productive efficiency. Producing output with minimum feasible resource cost or without waste.
83. Dynamic efficiency. Improving products or production methods through innovation over time.
84. Market failure. A situation in which unregulated market outcomes are inefficient or otherwise socially undesirable.
85. Externality. An effect of production or consumption on outsiders not reflected in private decisions.
86. Negative externality. An uncompensated harmful effect imposed on third parties.
87. Positive externality. An uncompensated benefit received by third parties.
88. Private cost. A cost borne directly by the decision-maker.
89. External cost. A cost imposed on someone outside the transaction.
90. Social cost. Private cost plus external cost.
91. Private benefit. A benefit received directly by the decision-maker.
92. External benefit. A benefit enjoyed by third parties.
93. Social benefit. Private benefit plus external benefit.
94. Marginal private cost. Extra cost borne directly by producers or consumers for one more unit.
95. Marginal external cost. Extra uncompensated cost imposed on others from one additional unit.
96. Marginal social cost. Extra total cost to society from producing or consuming one more unit.
97. Marginal private benefit. Extra benefit enjoyed directly by one more unit’s decision-maker.
98. Marginal external benefit. Extra benefit to outsiders from one additional unit.
99. Marginal social benefit. Extra total benefit to society from one more unit.
100. Social optimum. The output where marginal social benefit equals marginal social cost under the model.

6. Government intervention and equity: words 101–120

Government action may improve a market outcome but has information, administration and unintended-consequence limits. Evaluation must include these trade-offs.

101. Government intervention. A policy action intended to affect market decisions or outcomes.
102. Efficiency. Obtaining the greatest feasible value from scarce resources, given an objective.
103. Equity. Fairness in the distribution of opportunities, resources or outcomes.
104. Regulation. Rules set by authorities to influence market behaviour.
105. Corrective taxation. A tax intended to reduce an activity with negative external costs.
106. Corrective subsidy. Support intended to encourage an activity with positive external benefits.
107. Information failure. A problem arising because relevant decision-making information is missing or distorted.
108. Asymmetric information. A situation where participants have unequal access to relevant information.
109. Moral hazard. A change in risk-taking when protection reduces the decision-maker’s exposure to losses.
110. Adverse selection. Poor selection outcomes arising when hidden characteristics affect participation.
111. Public good. A good that is both non-rivalrous and non-excludable.
112. Non-rivalry. One person’s use does not significantly reduce availability to others.
113. Non-excludability. It is difficult to prevent non-payers from benefiting.
114. Free-rider problem. People benefiting without paying, reducing incentives for private provision.
115. Common resource. A resource that is rivalrous but difficult to exclude users from.
116. Government failure. When intervention creates costs or inefficiencies exceeding the benefits achieved.
117. Unintended consequence. An outcome of a decision that its maker did not seek.
118. Policy trade-off. An improvement in one objective accompanied by a cost to another.
119. Third-degree price discrimination. Charging distinct identifiable customer groups different prices not explained solely by cost differences.
120. Competition policy. Measures intended to protect competition and limit harmful market power.

7. National income and macroeconomic models: words 121–140

Macroeconomics studies the whole economy. Distinguish nominal from real changes before drawing conclusions from data.

121. Macroeconomics. The study of economy-wide output, prices, employment and policy outcomes.
122. Microeconomics. The study of choices and markets involving individual agents.
123. Circular flow of income. A model showing flows of production, expenditure and income between economic sectors.
124. Aggregate demand. Total planned spending on domestically produced output at different price levels.
125. Aggregate supply. The total output producers are willing and able to supply at different price levels.
126. Consumption. Household expenditure on goods and services.
127. Investment. Spending on capital goods that can increase future productive capacity.
128. Government expenditure. Public-sector purchases of goods and services.
129. Exports. Goods and services sold to buyers abroad.
130. Imports. Goods and services purchased from foreign suppliers.
131. Net exports. Exports minus imports, written X − M.
132. Gross domestic product. The monetary value of final output produced within a country in a period.
133. Nominal GDP. GDP measured at current prices without adjusting for price changes.
134. Real GDP. GDP adjusted to remove the effect of price-level changes.
135. Per capita GDP. GDP divided by the population, a rough output-per-person measure.
136. Autonomous expenditure. Spending that does not depend on current national income within the model.
137. Induced expenditure. Spending that changes when national income changes.
138. Marginal propensity to consume. The fraction of extra income spent on consumption.
139. Multiplier effect. The amplified change in national income resulting from an initial spending change.
140. Output gap. The difference between actual output and the economy’s potential output.

8. Macroeconomic objectives and indicators: words 141–160

Living standards are wider than national income. A strong answer recognises material outcomes and quality-of-life concerns.

141. Economic growth. An increase in the productive output of an economy over time.
142. Actual growth. An increase in current real output.
143. Potential growth. An expansion in the economy’s sustainable productive capacity.
144. Inflation. A sustained rise in the general price level.
145. Deflation. A sustained fall in the general price level.
146. Disinflation. A decrease in the rate of inflation while prices may still rise.
147. Demand-pull inflation. Price increases arising from strong aggregate spending relative to output capacity.
148. Cost-push inflation. Price increases arising from higher production costs or reduced aggregate supply.
149. Unemployment. The condition of people available and seeking work but without a job under the definition used.
150. Unemployment rate. Unemployed people divided by the labour force, expressed as a percentage.
151. Cyclical unemployment. Joblessness associated with a downturn in economic activity.
152. Structural unemployment. Joblessness caused by mismatches between workers’ skills or locations and available jobs.
153. Frictional unemployment. Temporary joblessness while people search for suitable work.
154. Labour force. People employed or unemployed and actively participating in the labour market.
155. Productivity. Output produced per unit of input, such as labour hours.
156. Standard of living. Material and non-material aspects of people’s wellbeing.
157. Material standard of living. Wellbeing considered through access to goods, services and income.
158. Non-material standard of living. Wellbeing aspects such as leisure, environmental quality and health.
159. Income distribution. How total income is shared across individuals or households.
160. Sustainable growth. Economic growth maintained without undermining future environmental and economic capacity.

9. Macroeconomic policies and Singapore: words 161–180

Singapore’s exchange-rate-centred monetary framework deserves attention: do not assume every central bank operates identically.

161. Fiscal policy. Government use of spending and taxation to influence economic activity.
162. Expansionary fiscal policy. Higher spending or lower taxes aimed at stimulating aggregate demand.
163. Contractionary fiscal policy. Lower spending or higher taxes aimed at restraining aggregate demand.
164. Budget deficit. Government expenditure exceeding revenue in the stated period.
165. Budget surplus. Government revenue exceeding expenditure in the stated period.
166. Monetary policy. Central-bank actions influencing monetary conditions and economic objectives.
167. Exchange rate. The price of one currency in terms of another.
168. Exchange-rate policy. Use of currency value management to influence economic conditions.
169. Appreciation. An increase in the value of a currency relative to another.
170. Depreciation. A decrease in the value of a currency relative to another.
171. Managed float. An exchange-rate system involving market forces and some official management.
172. Interest rate. The cost of borrowing or return on lending expressed relative to the amount.
173. Supply-side policy. Measures intended to improve the economy’s productive capabilities or incentives.
174. Human capital. Workers’ skills, knowledge and productive abilities.
175. Infrastructure. Transport, utilities and other foundational networks supporting production.
176. Automatic stabiliser. A budget mechanism changing with activity without a new discretionary decision.
177. Discretionary policy. An intentional new policy change made by decision-makers.
178. Policy effectiveness. The extent to which a measure achieves its intended objective after costs and limits.
179. Time lag. A delay between recognising a problem, taking action and seeing effects.
180. Monetary Authority of Singapore. Singapore’s central bank, which manages monetary policy centred on the exchange rate.

10. Globalisation, trade and evaluation: words 181–200

Trade raises questions about opportunity cost, distribution and adjustment. End essays with a reasoned judgement, not a slogan.

181. Globalisation. Increasing economic integration through trade and flows of capital, labour and information.
182. International trade. Exchange of goods and services between economies.
183. Specialisation. Concentrating resources on activities with relatively favourable production opportunities.
184. Comparative advantage. Lower opportunity cost of producing a good relative to another producer.
185. Absolute advantage. Ability to produce more output with the same resources.
186. Terms of trade. An index comparing export prices with import prices.
187. Free trade. International trade without policy-imposed barriers such as tariffs and quotas.
188. Protectionism. Government measures restricting imports or favouring domestic producers.
189. Tariff. A tax on imported products.
190. Import quota. A quantitative limit on imported products.
191. Trade diversion. A switch from more efficient to less efficient suppliers due to trade preferences.
192. Trade creation. A shift to lower-cost suppliers resulting from trade liberalisation or agreements.
193. Balance of trade. The value of goods exports minus goods imports over a period.
194. Current account. The external account including trade in goods, services and certain income flows.
195. Foreign direct investment. Cross-border investment involving lasting influence or control of a business.
196. Exchange-rate risk. Uncertainty about transaction values caused by currency movements.
197. Economic integration. Closer coordination of economic activities or policies across economies.
198. Case study evidence. Information from data, news or examples used to support an economic argument.
199. Evaluation. Weighing impacts, limitations, competing perspectives and evidence before judging.
200. Judgement. A reasoned conclusion that answers the specific question and recognises key trade-offs.

Worked example 1: scarcity and opportunity cost in everyday life

A student has one free afternoon and chooses extra Economics revision instead of a paid part-time shift. The opportunity cost of the revision choice is the value of the next-best alternative that is sacrificed, which may include the income and experience from working. The ‘cost’ is not automatically every activity the student could have done. The important words are scarcity, choice, next-best alternative and opportunity cost.

Worked example 2: demand increases but quantity demanded also changes

Suppose a population increase raises demand for rental apartments, other things equal. The demand curve shifts right. At the old price, the quantity demanded is now greater; as market price adjusts upwards, the quantity demanded moves along the new demand curve. A strong answer distinguishes the shift caused by a non-price determinant from the movement caused by the price change. A diagram should label both curves and the initial and final equilibria.

Worked example 3: a tax and an externality

Consider a product whose consumption imposes costs on third parties. Private buyers may not account for the marginal external cost, and market quantity can exceed the social optimum. A corrective tax might bring private decisions closer to the full social cost. Yet the outcome depends on how the tax is set, whether consumers respond, and enforcement or administrative costs. ‘A tax solves the problem’ is an incomplete evaluation; explain both the intended mechanism and its limitations.

Worked example 4: inflation does not mean prices are falling more slowly

Suppose the inflation rate decreases from 5% to 2%. This is disinflation: the general price level is still rising, just more slowly. Deflation would mean a sustained fall in the general price level. In case-study questions, confusing these words can reverse the meaning of an entire paragraph.

How to turn vocabulary into a stronger H2 Economics essay

Use the sequence claim → mechanism → consequence → limitation → judgement. Begin with a relevant economic concept rather than a vague opinion. Explain the causal steps linking the concept to the case. Use available evidence, identify which people are helped or harmed, acknowledge assumptions and finish by answering the question asked. For example, a higher indirect tax may raise consumer prices and reduce the quantity traded, but the size of the reduction depends partly on demand elasticity and the distribution of the tax burden.

A four-week Economics study plan

1. Week 1: Learn 40 terms from the central economic problem and markets. Draw a diagram or make a real decision example for each group of five.
2. Week 2: Add 40 terms from elasticity, firm decisions and market failure. Practise writing two-sentence causal mechanisms using accurate vocabulary.
3. Week 3: Read news or published data carefully. Distinguish inflation from the price level, growth from wellbeing, and supply changes from movements along supply.
4. Week 4: Write one timed case-study paragraph and one essay plan, with explicit evidence and one justified limitation. Check whether every technical word is necessary and correct.

Frequently asked questions

Do I need to study every term in JC1?

No. This independent glossary covers the full H2 syllabus. Schools sequence microeconomics and macroeconomics differently, and some terms will be more relevant after the first year.

Is H2 Economics mainly memorising definitions?

No. Precise definitions are a foundation, but case studies and essays also require analysing relationships, applying concepts to evidence and evaluating decisions from different perspectives.

What is the difference between a demand shift and a change in quantity demanded?

A change in demand shifts the entire curve because a non-price factor changes. A change in quantity demanded is a movement along one demand curve caused by the good’s own price changing.

How do I make better evaluation paragraphs?

Identify which objective matters, who is affected, the assumptions behind the mechanism, possible unintended consequences and the conditions under which the policy would work best. End with a specific judgement.

Does Singapore use the same monetary policy as every other economy?

No. Singapore places the exchange rate at the centre of monetary policy. Learn the actual policy framework before applying general monetary-policy vocabulary.

Official syllabus and next reading

Check the SEAB H2 Economics syllabus 9570 for 2027 and the 2027 A-Level subject listing. For choices, read H1 versus H2 Economics in JC. For related teaching, see H2 Economics case studies and essays. Return to eduKate Singapore when you need your next guide.

Teaching guide

Do not test Economics vocabulary as spelling alone. Give the student a real decision, a graph or a policy scenario. Ask them to define the relevant idea, explain a cause-and-effect mechanism, consider an alternative outcome and defend a reasoned conclusion.