Economics Key Terms

Opportunity cost- the next best alternative given up when an economic decision is made

Allocative efficiency- not possible to make someone better off without making someone else worse off

Productivity- a measure of efficiency, measurig the ratio of inputs to outputs

Specialisation- production of a load of certain products that when put together will make a complete range of goods

Effective Demand- demand supported by the ability to pay for it

Normal Goods- goods or services that see a rise in demand when income rises

Inferior Goods- goods or services that will see demand fall when income rises

Complementary Goods- goods that are consumed together

Composite Demand- a good that is demanded for more than one purpose so that an increase in demand for one purpose causes a reduction in supply for the other purpose

Derived Demand- When the demand for one good or service comes from the demand from another good or service

Extension in supply- When there is an increase in supply because the market price has risen

Contraction in supply- When the amount offered for sale is reduced because the price level has fallen

Joint Demand- When…