Pearson Edexcel UK GCSE Economics 1EC0
Every key formula and concept for Edexcel GCSE Economics (1EC0) — PED, YED, PES, total revenue, market failure, GDP, inflation, unemployment, and macro policy for Paper 1 and Paper 2.
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Aligned with the latest 2026 syllabus and board specifications. This sheet is prepared to match your exam board’s official specifications for the 2026 exam series.
Pearson Edexcel GCSE Economics (1EC0) tests your ability to apply economic models, calculate key indicators, and evaluate policy decisions. This formula sheet brings together the calculations, definitions, and frameworks you need for Paper 1 (Introduction to economic understanding) and Paper 2 (National and international economy).
Elasticity formulas — PED, YED, PES — with full interpretation
Total revenue, productivity and equilibrium calculations
Macroeconomic indicators: GDP, inflation, unemployment, BOP
Policy tools — fiscal, monetary, supply-side — and trade frameworks
How demand and supply interact to set price and quantity in a free market.
The quantity consumers are willing and able to buy at each price.
Law of demand
As price falls, quantity demanded rises (inverse relationship). Demand curve slopes downwards. Shifts in demand
Caused by changes in income, tastes, prices of substitutes/complements, advertising, population, expectations The quantity producers are willing and able to sell at each price.
Law of supply
As price rises, quantity supplied rises (positive relationship). Supply curve slopes upwards. Shifts in supply
Caused by changes in costs of production, technology, taxes, subsidies, weather (for agriculture), number of suppliers Market equilibrium
Where Quantity demanded = Quantity supplied. Determines equilibrium price (P*) and quantity (Q*) Excess demand (shortage)
P below equilibrium → Qd > Qs → upward pressure on price Excess supply (surplus)
P above equilibrium → Qs > Qd → downward pressure on price TR
TR = P × Q (Price × Quantity sold) Total revenue links directly to PED — see elasticity section.
Measures the responsiveness of one variable to a change in another. Always express as %.
Formula
PED = % change in quantity demanded ÷ % change in price % change
% change = (New − Old) ÷ Old × 100 Elastic (PED > 1)
Demand changes by more than the price change. Cutting price raises TR. Inelastic (0 < PED < 1)
Demand changes by less than the price change. Raising price raises TR. Unitary (PED = 1)
% change in Qd = % change in P. TR is unchanged. Determinants
Availability of substitutes, necessity vs luxury, % of income spent, time period, brand loyalty, addictiveness PED is normally negative — Edexcel often expects you to ignore the sign and use the magnitude.
Formula
YED = % change in quantity demanded ÷ % change in income Normal good (YED > 0)
Demand rises as income rises Luxury / income-elastic (YED > 1)
Demand rises by more than income (e.g. holidays, jewellery) Necessity (0 < YED < 1)
Demand rises but by less than income (e.g. food, fuel) Inferior good (YED < 0)
Demand falls as income rises (e.g. supermarket own-brands) Formula
PES = % change in quantity supplied ÷ % change in price Determinants
Time period (short-run more inelastic), spare capacity, ease of stockholding, mobility of factors of production, number of producers How firms produce, and how labour is priced and allocated.
Labour productivity
Output per worker = Total output ÷ Number of workers Labour productivity (per hour)
Total output ÷ Total worker-hours Higher productivity lowers unit costs and raises competitiveness.
Derived demand
Demand for labour is derived from demand for the goods/services it produces Wage determination
Equilibrium wage set where demand for labour = supply of labour. Shifts in either curve change the wage rate. Workers focus on a specific task → higher productivity, lower unit costs, but risk of boredom, over-dependence, and reduced flexibility. When markets fail to allocate resources efficiently and what governments can do about it.
Negative externalities
Costs to third parties (e.g. pollution) — markets over-produce. Solution: tax, regulation. Positive externalities
Benefits to third parties (e.g. vaccination, education) — markets under-produce. Solution: subsidy, provision. Non-excludable (can't stop people using them) and non-rival (one person's use doesn't reduce another's). Examples: street lighting, defence. Free-rider problem means private firms won't supply — government must provide. Merit goods
Under-consumed because consumers under-estimate benefits (e.g. healthcare, education). Solution: subsidies, free provision, information. Demerit goods
Over-consumed because consumers under-estimate costs (e.g. tobacco, alcohol). Solution: taxes, regulation, age restrictions. Indirect taxes raise price and reduce quantity. Subsidies lower price and raise quantity. Maximum prices (price ceilings) cause shortages. Minimum prices (price floors) cause surpluses. The four main macroeconomic objectives are economic growth, low inflation, low unemployment, and a stable balance of payments.
GDP
Total value of goods and services produced in an economy in one year Real GDP
GDP adjusted for inflation — measures actual change in output Economic growth
% change in real GDP over a period Definition
Sustained rise in the general price level — fall in the purchasing power of money CPI (Consumer Prices Index)
Tracks the price of a representative basket of goods and services. % change in CPI = inflation rate. Causes
Demand-pull (excess demand) and cost-push (rising costs of production, e.g. wages, raw materials, imports) Claimant count
Number of people claiming unemployment-related benefits — easy to measure but excludes those not eligible ILO measure
Survey-based — counts those without a job, available to start in 2 weeks, and actively seeking work in last 4 weeks. More accurate but more expensive to collect. Types
Frictional, structural, cyclical (demand-deficient), seasonal Current account
Trade in goods + Trade in services + Primary income (investment income) + Secondary income (transfers) Trade balance
Exports − Imports. Positive = surplus, negative = deficit. How the government and central bank manage the economy.
Tools
Government spending and taxation — set in the annual Budget Expansionary fiscal policy
Cut taxes / raise spending → boost AD → higher growth and employment, but risk of higher inflation and deficit Contractionary fiscal policy
Raise taxes / cut spending → cool AD → lower inflation, but risk of lower growth Tool — interest rates
Set by the Bank of England's MPC. Lower rates encourage borrowing/spending; higher rates discourage them and support saving. Quantitative easing (QE)
Central bank creates money to buy government bonds — raises money supply and lowers long-term interest rates. Long-term policies to raise productive potential: investment in education and training, infrastructure, deregulation, lower business taxes, labour-market reforms. Slow to take effect but reduce inflationary pressure as they boost growth. The international economy and the UK's place in it.
The increasing integration of national economies through trade, capital flows, migration and technology. Drivers: containerisation, internet, fall in trade barriers, rise of MNCs. Free trade
Removal of trade barriers — lower prices, more choice, higher growth, but domestic industries may struggle Protectionism tools
Tariffs (taxes on imports), quotas (limits on imports), subsidies to domestic producers, regulations Appreciation (strong £)
£ rises → exports more expensive abroad, imports cheaper at home → worsens current account Depreciation (weak £)
£ falls → exports cheaper abroad, imports more expensive at home → improves current account Remember SPICED: Strong Pound, Imports Cheap, Exports Dear.
Bring jobs, investment, technology and tax revenue to host countries — but can also exploit lower wages, avoid tax, and damage local firms. Always evaluate both sides. Edexcel uses two 1h 30m papers, each worth 50%.
Topics 1.1–1.6: market, business economics, factors of production, productivity, specialisation, market structures, labour market. Heavy focus on micro: demand/supply, elasticity, market failure.
Topics 2.1–2.4: macroeconomic objectives, government intervention, international trade, globalisation, financial sector. Heavy focus on macro indicators, policy and trade.
Define / State / Identify
1–2 marks — short factual answer Explain / Calculate
3–4 marks — show working and link cause to effect Discuss / Analyse
6 marks — chain of reasoning with two-sided analysis Evaluate / Assess
9 or 12 marks — argument, counter-argument, supported judgement using data from the extract Boost your Cambridge exam confidence with these proven study strategies from our tutoring experts.
Most analysis answers are stronger with a labelled D/S diagram. Practise drawing them in under 60 seconds with axes, curves, equilibrium and shifts clearly labelled.
Always state the formula, substitute values, and give units (£ or %). Method marks are awarded even when the final number is wrong.
Edexcel extracts contain real-world data — quote specific figures and direct evidence from the extract in your evaluation. Generic answers cap at low marks.
On 9- and 12-mark policy questions, weigh up advantages vs disadvantages, magnitude, time lag, side effects, and trade-offs between objectives — then make a judgement.
Quick answers about this free PDF and how to use it for exam revision and active recall.
Yes. This Tutopiya formula sheet is free to use and you can download it as a PDF from this page for offline revision. There is no payment or account required for the PDF download.
This page groups key Economics formulas in one place for revision. Master Pearson Edexcel GCSE Economics (1EC0) with this 2026 formula sheet. Covers PED, YED, PES, total revenue, GDP, inflation, unemployment, balance of payments, and macro policy for Paper 1 and Paper 2. Always cross-check with your official syllabus and past papers for your exam session.
No. In the exam you must follow only what your exam board allows in the hall—usually the official formula booklet or data sheet where provided. This page is a revision and teaching aid, not a replacement for board-issued materials.
It is written for students preparing for assessments at Secondary in Economics, including classroom revision, homework support, and independent study. Teachers and tutors can also share it as a quick reference.
Work through past paper questions, quote the correct formula before substituting values, and check units and notation every time. Pair this sheet with timed practice and mark schemes so you see how examiners expect working to be set out.
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Work through diagrams, elasticity calculations, and 12-mark evaluation answers with an experienced Edexcel GCSE Economics tutor. We focus on application, analysis and evaluation — the skills that lift you to grades 8 and 9.
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This formula sheet aligns with the Pearson Edexcel UK GCSE Economics (1EC0) specification examined in 2026.
Always show full calculation working with units, draw diagrams where relevant, and reference data from the extract in evaluation answers.