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Production possibility curve shows the maximum output of two different
goods with the current resources.

Opportunity cost
the next best alternative foregone

Division of Labour/Specialisation
Division of Labour is the specialisation of workers in particular tasks

Positive Statements
Objective statements that can be tested to be factual


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-Normal good: demand rises as income rises
-Inferior good: demand falls as income rises

measures the responsiveness of supply to a change in price

Price Mechanism
system where changes in price help allocate goods and services efficiently

Consumer Surplus
the difference between what consumers are willing and able to…

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Derived demand
the demand for a factor of production resulting from the demand for a good
it is used in the production of

Market Failure
market failure occurs when the price mechanism fails to allocate resources

Private cost
all cost which the supplies bears in producing the good


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from the good or service
non-diminishable ­ consumption by one individual does not reduce the
amount available for consumption by others

Information failure
when some or all of the participants of an economic exchange don't have
perfect knowledge

Geographical mobility
the ability and willingness of labour to move from one…


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