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Key Terms Econ 1
Commodity- A good that is traded but usually refers to raw
materials or semi-manufactured goods that are traded in bulk such
as tea, Iron ore, oil or wheat. Often these are unbranded goods
where all firms' products are very similar and undistinguishable from
Economic Goods- Goods that are scarce therefore have an
Economic Welfare- The benefit or satisfaction an individual or
society gets from the allocation of resources. To measure this, you
need to take into account How well off people are, how much they
have, their environment, standard of living and their physical well
Economies of scale- Where an increase in the scale of production
leads to reductions in average total cost for firms.
Exports- Goods or Services sold abroad
Free Goods- Goods that have no opportunity cost e.g. Air, Water
Free-Market economy- An economy where there is very limited
government involvement in providing goods and services. Its main
role is to ensure that the rules of the market are fair so that; people
cannot steal each others property.
Goods and services- Goods are tangible products, services are
intangible e.g. A train ride. You don't buy the train but you benefit
from the train travelling.
Opportunity Cost- The next best alternative given up when an
economic decision is made. This is NOT a range only a single
P.P.B- Production possibility boundary, the PPB indicates the
maximum possible output that can be given a t a fixed set of
resources and technology in a particular time period.
Supply- The amount offered for sale at each given price.