Economics definitions

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  • Created by: alexckerr
  • Created on: 04-01-19 12:21
Supply
The amount producers are willing and able to supply at each and every price, all other things unchanged.
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Demand
The amount consumers and willing and able to buy at each and every price, all other factors unchanged.
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PPF
The maximum combination of goods and services that an economy can produce with its factors of production at a given moment given its resources.
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Price elasticity of demand
The responsiveness of demand to changes in price, all other factors unchanged.
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Economies of scale
are the cost advantages that enterprises obtain due to their scale of operation (typically measured by amount of output produced), with cost per unit of output decreasing with increasing scale.
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Diseconomies of scale
Occurs if unit costs rise in a business as the scale of production increases.
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Average revenue
measures the amount paid by consumers per item.
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Total revenue
measures the total expenditure by consumers. Total income of the business.
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Normal profit
Total costs equal to total revenue.
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Super-normal profit
Total revenue is greater than total costs.
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Profit maximisation
occurs when a business earns the highest possible profit.
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Sales maximisation
is a theoretical objective of a firm which involves selling as many units of a good or service as possible, without making a loss.
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Perfect competition
A perfectly competitive market is a hypothetical market where competition is at its greatest possible level.
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Monopoly
A market structure characterized by a single seller, selling a unique product in the market.
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Oligopoly
is a market structure with a small number of firms, none of which can keep the others from having significant influence.
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GDP
Measures the value of the final goods and services produced in an economy over a year.
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GNI
The income earned in an economy over a year.
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Aggregate demand
measures the total planned spending on final goods and services at different prices. It is the total demand in the economy.
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Aggregate supply
measures the total planned output of final goods and services at each and every price, all other factors unchanged, in a given time period.
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Inflation
occurs when there is a sustained increase in the general price level over a period of time.
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Deflation
occurs when there is a sustained fall in the general price level over a given period.
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Unemployment
The number of people who are willing and able to work but are not employed at the given wage rate at a given moment of time.
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Economic growth
occurs when there is a increase in national income over time.
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Current account
the sum of the balance of trade (goods and services exports minus imports), net income from abroad, and net current transfers.
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Current account deficit
means the value of money leaving the country on the current account is greater than the value of money entering the country.
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Marshall learner condition
is the condition that an exchange rate devaluation or depreciation will only cause a balance of trade improvement if the absolute sum of the long-term export and import demand elasticities is greater than unity.
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J curve effect
where a country's balance of trade initially worsens following a devaluation or depreciation of its currency, before it recovers to a higher level than where it started.
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Exchange rate
The price of one currency in terms of another.
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Floating exchange rate
The price of a currency is determined by market forces of supply and demand of the currency in the foreign currency markets.
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Fixed exchange rate
The government decides at what price the currency is.
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Comparative advantage
Where one country can produce products at a lower opportunity cost than another.
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Free trade
occurs when there are no barriers to trade.
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Trading blocs
They are groups of countries that join together and have a free trade between each other.
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Protectionism
Protecting one country's producers from competition abroad.
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Tarrif
are used to restrict imports by increasing the price of goods and services purchased from overseas and making them less attractive to consumers.
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Quota
is a government-imposed trade restriction that limits the number or monetary value of goods that a country can import or export during a particular period.
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Subsidy
A government grant given to producers to help reduce their costs.
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Card 2

Front

The amount consumers and willing and able to buy at each and every price, all other factors unchanged.

Back

Demand

Card 3

Front

The maximum combination of goods and services that an economy can produce with its factors of production at a given moment given its resources.

Back

Preview of the back of card 3

Card 4

Front

The responsiveness of demand to changes in price, all other factors unchanged.

Back

Preview of the back of card 4

Card 5

Front

are the cost advantages that enterprises obtain due to their scale of operation (typically measured by amount of output produced), with cost per unit of output decreasing with increasing scale.

Back

Preview of the back of card 5
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