Economics B - Definition of terms. A-F

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Added value
is the difference between the price of a good or service and the cost of its material inputs.
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Allocation of resources
refers to the way resources are used and shared out (ie distributed) within the economic system.
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Assets
anything of value that can be made to yield benefits. Business assets can be phyical such as buildings, machines etc or they can be intangible such as a brandname or the skills of the workforces, or they can be purely financial
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Bank loan
a fixed sum of money borrowed from a bank and repaid with regular monthly repayments plus interest over a fixed period.
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Bank of England
the central bank of the UK, responsible for monetary policy and regulation of the banking system.
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Banks
channel funds from savers to borrowers as well as operating a payment system.
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Brand
the name or symbol that is closely associated with a product or service. Brands add value, increase consumer loyalty and may attract a higher price.
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Break-even point
the level of output where neither a profit not a loss is being made. the point at which total revenue equals cost.
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Cash flow
the movement of cash into (cash inflow) and out (cash outfloe) of a business.
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Cash flow forecasts
project outward flows of cash income and expenditure month by month
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ceteris paribus
means all things being equal, an approach which enables economists to consider the impact of one change at a time.
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Collateral
anything of value that can be seized by a lender if a loan is not repaid. Collateral is often property
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Competition
causes businesses to strive for improvements that will cause them to increase sales. This leads to an efficient allocation of resources.
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Competitive advantage
any feature of a business that enables it to compete effectively.
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Competive pricing
a pricing strategy that consists of matching your competitors prices or slightly undecutting them.
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Complements
goods and services that are brought together eg cars and petrol, dvd players and dvd's
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consumer sovereignty
describes the roles of the consumer in determining the allocation of resources. By buying what they want most, consumers send a signal to the producers regarding their preferences.
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Contribution
price minue, variable cost (P-VC). This can be used to calculate the break-even point.
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Corporate social responsibility
means taking decisions in a way that takes into account all stakeholders interests
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Cost of sales
another way of describing variable costs or direct costs, they are subtracted from turnover to give gross profit.
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Creative desctruction
occurs when new technologies lead to new or improved products that drive competitors out of business
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Creditor
a person or company that the business owes money to, usually in exchange for goods or services
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Demand
the quantity of goods or services that consumers are willing and able to buy, at a given time and a given price.
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Demand curve
a graphical representation of the relationship between price and quantity demanded
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Division of labour
involves individuals specialising in one particular type of activity in the workplace. Each employee has a specific task, repition helps them to do it well.
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Economic agents
includes all those who take the decisions to buy, spend, produce, sell, or in any way affect the way that resources are used.
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Efficiency
means using resources in the most economical way possible.
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Entry
refers to the way profit in a growing market attracts businesses to produce for it. Profit acts as an incentive to enter the market.
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Entrepreneurs
take the risks of setting up, organising and operating in a business venture.
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Equilibrium price
the price at which quantity demanded is the same as quantity supplied, sometimes called the market clearing price.
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Excess demand
occurs when the quantity demanded oustrips the quantity supplied. Some people who want to buy at the curren price will be unable to do so. The price is too low for the marke t to clear
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|excess supply
occurs when the quantity supplied is greater than the quantity demanded. Some suppliers will beunable to sell the goods at the current price. The price is too high for the market to clear.
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Exchange rate
the price of one currency expressed in terms of another. it is determined by the interaction of demand for and supply of the currency.
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Exit
from the market means closing down production because of losses or low profit
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Exports
are goods and services produces domestically and sold to a foreign economy
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External benefits
are benefits or postive side effects that benefit a third party who is neither the producer not the consumer
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External costs
are costs or negative side effects imposed on a third party who is neither the producer not the consumer
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Externalities
positve or negative side effects caused by a product that affects third parties who are neither buyers or sellers of the product.
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Other cards in this set

Card 2

Front

refers to the way resources are used and shared out (ie distributed) within the economic system.

Back

Allocation of resources

Card 3

Front

anything of value that can be made to yield benefits. Business assets can be phyical such as buildings, machines etc or they can be intangible such as a brandname or the skills of the workforces, or they can be purely financial

Back

Preview of the back of card 3

Card 4

Front

a fixed sum of money borrowed from a bank and repaid with regular monthly repayments plus interest over a fixed period.

Back

Preview of the back of card 4

Card 5

Front

the central bank of the UK, responsible for monetary policy and regulation of the banking system.

Back

Preview of the back of card 5
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