Basic Micro Economics

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Created by: Toby Downes
Created on: 22-04-13 12:38

Economies of scale

where an increase in scale of production leads to reductions in average total costs for a firm

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Diseconomies of scale

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

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Price Elasticity

the responsiveness of demand o a change in price level. The formula is percentage change in quantity demanded, divided by percentage change in price.

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Merit Good

A good that would normally be under-consumed in a free market, as individuals do not fully percieve the benefits obtained from consumption. EG healthcare and education

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Demerit Goods

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

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Externality

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

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normative statement

opinion

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Positive statement

fact

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monopoly

a market structure dominated by a single seller or good

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normal goods

goods or services that will see a rise in demand when income increases

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inferior goods

goods or services that will see demand fall when income increases

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complimentary goods

goods that are consumed together. For example bread and butter or DVDs and DVD players

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composite demand

a good that is demanded for more than one purpose so that an increase in demand for one purpose reduces the available supplu for the other purpose, typically leading to higher prices. EG milk, being used in butter and cheese.

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derived demand

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

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Other cards in this set

Card 2

Front

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

Back

Diseconomies of scale

Card 3

Front

the responsiveness of demand o a change in price level. The formula is percentage change in quantity demanded, divided by percentage change in price.

Back

Card 4

Front

A good that would normally be under-consumed in a free market, as individuals do not fully percieve the benefits obtained from consumption. EG healthcare and education

Back

Card 5

Front

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

Back

View more cards

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Basic Micro Economics