Economics- Definition


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The amount consumers are willing and able to buy at a given price over a given time period.

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The quantity of a good or service that firms plan to sell at a given price in a given time period.

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Opprtunity Cost

The use of materials for one thing means you cannot use them again else where.

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Factors of Production

Land, Labour, Capital and Enterprise

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Capital Good

A machine- used to produce other goods including consumer goods.

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Consumer Goods

A good used by consumers to meettheir need or wants.

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Buffer stock

An Invention system that aims to limit the fluctuations of the price of a commodity.

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Capital spending

Goverment spending to improve the productive capacity of the nation, including infrastructure, schools and hospitals.

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A market situation in which there are a large number of buyers and sellers.

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Complementary products

Goods that are consumed together, for example bread and butter, or DVDs and DVD players.

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Complete market failure

Where the free market fails to provide a product at all i.e. the case of public goods.

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Demerit good

A good that would be over-consumed in a free market, as it brings less overall benefit to consumers that they realize.

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A situation within the market where supply does not equal demand.

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Division of labour

Breaking the production process down into a sequence of tasks, with workers assigned to particular tasks.

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Economies of scale

Where an increase in the scale of production leads to reductions in average total cost for firms.

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The price at which demand is equal to supply and there is no tendency for change.

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Excess demand

When demand is greater than supply at a given price.

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Excess supply

When supply at a particular price is greater than demand, this should signal to producers to lower prices.

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Costs or benefits that spill over to third parties external to a market transaction.

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