741085
Description
Flashcards by paige lole, updated more than 1 year ago
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Created by paige lole
over 11 years ago
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| Question | Answer |
| capital | man-made aids to production |
| opportunity cost | the cost of the next best alternative which is forgone when a choice is made |
| economic problem | how to allocate scarce resources among alternative uses |
| price elasticity of demand | measures the responsiveness of quantity demanded to a change in price |
| price elasticity of supply | measures the responsiveness of quantity supplied to a change in price |
| price elasticity of income | measures the responsiveness of quantity demand to a change in income |
| cross elasticity of demand | measures the responsiveness of quantity demanded of one product to a change in price of another product |
| allocative efficiency | when consumer satisfaction is maximised |
| negative externalities | when the social costs of an activity exceed the private costs |
| positive externalities | where the social benefits of an activity exceed the private benefits |
| merit goods | where the consumption of a product is more beneficial to consumers than they realise |
| demerit goods | where the consumption of a good is more harmful to the consumer than they actually realise |
| ceteris paribus | assumes that other variables stay the same |
| demand | the quantity of a product that consumers are willing and able to purchase at various prices over a period of time |
| economic efficiency | where both allocative and productive efficiency are achieved |
| consumer surplus | the extra amount that a consumer is willing to pay above the price is actually paid for a product |
| producer surplus | the difference between the price a producer is willing to accept for a product and what is actually paid |
| equilibrium price | the price where demand and supply are equal |
| external benefits | the benefits that accrue as a consequence of externalities to third parties |
| external costs | the costs that are the consequences of externalities to third parties |
| externality | an effect whereby those not directly involved in taking a decision are affected by the actions of others |
| factor of production | the resource inputs that are available in an economy for the production of goods and services ie. land, labour, capital and enterprise |
| market | an arrangement that brings buyers and sellers into contact |
| market failure | where the free market mechanism fails to achieve economic efficiency |
| inferior goods | goods for which an increase in income leads to a fall in demand |
| information failure | a lack of information resulting in consumers and producers making decisions that do not maximise welfare |
| non-excludability | situation existing where individual consumers cannot be excluded from consumption |
| non-rivalry | situation existing where consumption by one person does not affect the consumption of all others |
| normal goods | goods for which an increase in income leads to an increase in demand |
| production possibility curve | this show the maximum quantities of different combinations of output of two products, given current resources and state of technology |
| public goods | goods that are collectively consumed and have the characteristics of non-excludability and non-rivalry |
| productivity | output, or production, of a good or service per worker |
| scarcity | a situation where there are insufficient resources to meet all wants |
| specialisation | the concentration by a worker or workers, firm, region, or whole economy on a narrow range of goods and services |
| subsidy | a payment, usually from government, to encourage production or consumption of a product |
| substitute | a competing good |
| supply | the quantity of a product that producers are willing and able to provide at different market prices over a period of time |
| surplus | an excess of supply over demand |
| tradable permit | a permit that allows the owner to emit a certain amount of pollution and that, if unused or only partially used, can be sold to another polluter |
| division of labour | where the specalisation of labour where the production process is broken down into separate tasks |
| micro economics | the study of how households and firms make decisions in markets |
| factors affecting demand | consumer tastes and preferences income available to consumer prices of substitute/complementary goods interest rates advertising consumer confidence |
| indirect tax | tax levied on goods and services |
| regulation | a level/limit of quantity supplied of a product. Law enforced ie health and safety regulation |
| equilibrium quantity | the quantity that is demanded and supplied at the equilbrium price |
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