CCEA Economics AS1 definitions
Definitions of AS1
- Created by: aoifehenderson
- Created on: 10-05-18 09:33
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- AS1 Definitions
- market types
- Free market
- An economic system which resolves the economic problem through the market/price mechanism
- Free market
- key economic concepts
- Normative statement - cannot be proved or disproved in relation to real world facts as they are based on value judgement
- positive statement - statements that can be proved or disproved in relation to facts
- demand and supply in product markets
- demand
- the quantidy of a good of services that a customer is willing and able to buy at a range of prices
- Supply
- the quantidy of a good or service that producers are willing and able to supply at a given price in a given time period
- consumer suplus
- the difference between the price a person is willing to pay and the price they actually pay
- producer surplus
- the difference between the price a producer is willing to supply and what they actually supply it at
- economic rent
- a payment to a factor of production over and above the necesary to secure its services
- Transfer earnings
- the minimum reward required to keep a factor of production employed in its present use
- demand
- Elasticity of demand and supply
- price elasticity of demand
- how responsive quantidy demand is to a change in price
- Income elasticity of demand
- how responsive quantidy demanded is to a change in price
- Cross price elasticity of demand
- how resposive quantidy demanded for one good is to a change in price of another good
- price elasticity of supply
- how responsive quantidy supplied is to a change in price
- price elasticity of demand
- The basic economic problem
- opportunity cost
- the next best alternative forgone when a choice is made about how a resource should be made
- Possibility Production Fronteir
- a diagram that shows the maximum combinations of two or more goods that can be produced using all resources efficiantly
- market
- a place where, or means by which buyers and sellers come together to exchange goods and services
- opportunity cost
- types of goods
- inferior goods
- goods that have a negative value for Income elasticity of demand, as income rises demand falls
- substitute goods
- goods in competitive demand and have a positive cross price elasticity of demand, as demand for one good rises the price for another increases
- complementary goods
- goods in joint demand and have a negative cross price elasticity f demand, as demand for one good falls the price of another rises
- public good
- a good which is non rivalry and non exclusive and therefore would not be provided by the market
- Merit Goods
- goods the government believes we should consume more of than would occur in free market conditions
- demerit goods
- goods which the government believes would be over consumed if provided in free market conditions
- inferior goods
- government intervention
- market types
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