Economics Definitions - Unit 1 (Microeconomics)

Definitions are a key part of the AS economics exam. The following includes definitions for the AQA Economics Unit 1 exam. Although being specifically written for AQA, the terms will still be useful for other exam boards. This list is not a complete guide but does cover some of the majority of terms used throughout the AS course.

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  • Created by: josh-95
  • Created on: 20-04-16 13:09

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Economics Definitions ­ Unit 1 (Microeconomics)

Definitions are a key part of the AS economics exam. The following includes definitions
for the AQA Economics Unit 1 exam. Although being specifically written for AQA, the
terms will still be useful for other exam boards. This list is not a complete guide…

Page 2

Preview of page 2
Supply The quantity that a firm is willing and able to
sell at a given price.

Effective demand Demand backed up with the ability to pay.

Condition of demand A factor that determines the position of the
demand curve.

Normal good A good for which demand increases as
income increases.…

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Barter A medium of exchange which occurs when
there is a double coincidence of wants.

Money An effective medium of exchange which
allows specialisation.

Consumer surplus People that would have been willing to pay
more than the equilibrium price.

Producer surplus Businesses that would have been prepared
to supply at…

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Productive efficiency Occurs when it is impossible to produce
more of one good without producing less of
another.

Dynamic efficiency Occurs when a firm is actively reducing its
cost curves by implementing new
production processes.

Indirect tax A cost imposed by the government which
increases the supply costs faced by…

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Non-excludability Once provided no person can be excluded
from benefiting.

Non-rivalry Consumption by one person does not
reduce the amount available for
consumption by another.

Quai-public goods Products that are public in nature but do
not fully exhibit the features of non-rivalry
and non-excludability.

Public good A product which yields…

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Price maker A firm possessing the power to set the
market price.

Competitive market A market in which firms strive to outdo each
other.

Concentrated market A market with very few firms.

Pure monopoly A market in which there is only one firm
present.

Imperfect competition Any market structure between…

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Principal agent problem When decision making is deferred to an
expert who may not be making decisions in
the best interest of the clients.

Immobility of labour The inability of labour to move from one job
to another because of a variety of reasons.

Geographical immobility When workers find it…

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