Microeconomics

This is achieved in an economy when it is not possible to make anyone better off without making someone worse off, or you cannot produce more of one good without making less of another.

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

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

A good that is demanded for more than one purpose so that an increase in demand for one purpose reduces the available supply for the other purpose, typically leading to higher prices, e.g. milk used in butter and cheese.

The amount that consumers are willing and able to buy at each given price level.

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

When the demand for one good or service comes from the demand for another good or service. The demand for cars stimulates the demand for steel, therefore the demand for steel is derived demand.

Where an increase in the scale of production leads to increases in average total costs to firms.

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

Goods that are scarce and therefore have an opportunity cost.

Refers to the benefit or satisfaction an individual or society gets from the allocation of resources. We can attempt to measure the welfare of individuals but really we want to understand the overall effects on society as a whole. This will include how well off people feel, how much they have but also might consider other factors such as their environment and standard of living - their physical well-being, although this is hard to define.

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

When demand is greater than supply at a given price.

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

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

Goods that have no opportunity cost, for example air.

Where some consumers benefit from other consumers purchasing a good, particularly in the case of public goods.

When government intervention to correct market failure does not improve the allocation of resources or leads to a worsening of the situation. The costs of government intervention may therefore exceed the benefits.

The proportion to which demand changes when there is a change in income.

Goods or services that will see demand fall when income rises.

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

When the production of one good also results in the production of another.

When demand is greater than supply at a given price.

When the actions of consumers, producers and governments have effects that are unanticipated.

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

External benefit - The spillover benefit to third parties of an economic transaction.

External cost - The spillover cost to third parties of an economic transaction.

Private benefit - The benefit to an individual or firm of an economic transacion.

Private cost - The cost to an individual or firm of an economic transacion.

Social benefit - the full benefit to society of an economic transaction.

Social cost - the full cost to society of an economic transaction.

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

The price at which all goods are supplied will be demanded.

Goods that have no opportunity cost, for example air.

Where the market fails to produce what consumers require at the lowest possible cost.

Where some consumers benefit from other consumers purchasing a good, particularly in the case of public goods.

A good that would be under-consumed in a free market.

When government intervention to correct market failure does not improve the allocation of resources or leads to a worsening of the situation. The costs of government intervention may therefore exceed the benefits.

A market structure dominated by a single seller of a good.

The proportion to which demand changes when there is a change in income.

Goods or services that will see demand fall when income rises.

When the production of one good also results in the production of another.

When the actions of consumers, producers and governments have effects that are unanticipated.

External benefit - The spillover benefit to third parties of an economic transaction.

External cost - The spillover cost to third parties of an economic transaction.

Private benefit - The benefit to an individual or firm of an economic transacion.

Private cost - The cost to an individual or firm of an economic transacion.

Social benefit - the full benefit to society of an economic transaction.

Social cost - the full cost to society of an economic transaction.

The price at which all goods are supplied will be demanded.

Where the market fails to produce what consumers require at the lowest possible cost.

A good that would be under-consumed in a free market.

A market structure dominated by a single seller of a good.