Economics F581

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  • Created by: Fathma
  • Created on: 16-03-14 00:05
Economic problem
How to allocate scarce resources among alternative uses
1 of 90
Goods
Tangible products; i.e. products that can be seen and touched
2 of 90
Services
Intangible products; i.e products that cannot be seen or touched
3 of 90
Land
Natural resources in an economy
4 of 90
Labour
The quantity and quality of human resources
5 of 90
Capital
Man-made aids to production
6 of 90
Entrepreneur
Someone who bears the risks of the business and who organises production
7 of 90
Want
Anything you would like, irresprective of whether you have the resources to purchase it
8 of 90
Scarcity
A situation where there are insufficient resources to meet all wants
9 of 90
Opportunity cost
The cost of the (next) best alternative, which is foregone when a choice is made
10 of 90
Specialisation
The concentration by a worker or workers,firm,region or whole economy on a narrow range of goods and services
11 of 90
Exchange
The process by which goods and services are traded
12 of 90
Subsidy
A payment by a governing body to encourage the production or consumption of a product
13 of 90
Division of labour
The specialisation of labour where the production process is broken down into separate tasks
14 of 90
Productivity
Output, or production of a good or service, per worker
15 of 90
Production possibility curve
This shows the maximum quantities of different combinations of output of two products,given the current resources and the state of technology
16 of 90
Trade-off
The calculation involved in deciding on whether to give up one goof for another
17 of 90
Economic growth
Change in the productive potential of an economy
18 of 90
Productive potential
The maximum output that an economy is capable of producing
19 of 90
Economic system
The way in which production is organised in a country or group of countries
20 of 90
Market economy
An economic system whereby resources are allocated through the market forces of demand and supply
21 of 90
Price system
A method of allocating resources by the free movement of prices
22 of 90
Supply
The quantity of a product that producers are willing and able to provide at different market prices over a period of time
23 of 90
Demand
The quantity of a product that consumers are willing and able to purchase at various prices over a period of time
24 of 90
Command economy
An economic system in which the most resources are state owned and also allocated centrally
25 of 90
Mixed economy
An economic system in which resources are allocated through a mixture of the market and direct sector involvement
26 of 90
Market
Where or when buyers and sellers meet to trade or exchange products
27 of 90
Sub-market
A recognised or distinguishable part of a market. Also known as a market segment
28 of 90
Notional demand
A desire for a product
29 of 90
Effective demand
The willingness and ability to buy a product
30 of 90
Ceteris Paribus
Assuming other variable remain unchanged
31 of 90
Demand curve
This shows the relationship between the quantity demanded and the price of a product
32 of 90
Demand Schedule
The data that is used to draw the demand curve for a product
33 of 90
Consumer surplus
The extra amount that a consumer is willing to pay for a product above the price that is actually paid
34 of 90
Disposable income
Income after taxes on income have been deduced and state benefits have been added
35 of 90
Real disposable income
Income after taxes on income have been deduced and state benefits have been added and the result has been adjusted to take into account changes in the price level
36 of 90
Normal goods
Good which an increase in income leads to an increase in demand
37 of 90
Inferior goods
Good for which an increase in income leads to a fall in demand
38 of 90
Substitutes
Competing goods
39 of 90
Complements
Goods for which there is anoint demand
40 of 90
Profit
A difference between the total revenue of a producer and the total cost
41 of 90
Supply schedule
The data used to draw up the supply curve of a product
42 of 90
Producer surplus
The difference between the price a producer is willing to accept and what it actually paid
43 of 90
Price
The amount of money that is paid for a given amount of a particular good or service
44 of 90
Clearing price
Same as equilibrium price
45 of 90
Surplus
An excess of supply over demand
46 of 90
Shortage
An excess of demand over supply
47 of 90
Equilibrium quantity
The quantity that is demanded and supplied at the equilibrium price
48 of 90
Elasticity
The extent to which buyers and sellers respond to a change in market conditions
49 of 90
Price elasticity of demand
The responsiveness of the quantity demanded to a change in the price of the product
50 of 90
Price elastic
Where the percentage change in the quantity demanded is sensitive to a change in price
51 of 90
Price elastic
Where the percentage change in the quantity demanded is insensitive to a change in price
52 of 90
Income elasticity of demand
The responsiveness of demand to a change in income
53 of 90
Normal goods
Goods with a positive income elasticity of demand
54 of 90
Income inelastic
Goods for which a change in income produces a less than proportionate change in demand
55 of 90
Income elastic
Goods for which a change in income produces a greater proportionate change in demand
56 of 90
Inferior goods
Goods for which an increase in income leads to a fall in demand
57 of 90
Cross elasticity of demand
The responsiveness of demand for one product in relation to a change in the price of another product
58 of 90
Price elasticity of supply
The responsive of the quantity supplied to a change in the price of the product
59 of 90
Efficiency
Where the best use of resources is made to benefit of consumers
60 of 90
Allocative efficiency
Where consumer satisfaction is maximised
61 of 90
Market Failure
Where the free market mechanism fails to achieve economic efficiency
62 of 90
Productive efficiency
Where production takes place using the least amount of scarce resources
63 of 90
Economic efficiency
Where both a allocative and productive efficiency are achieved
64 of 90
Inefficiency
Any situation where economic efficiency is not achieved
65 of 90
Free market mechanism
The system by which the market forces of demand and supply determine prices and the decisions made by consumers and firms
66 of 90
Information failure
A lack of information resulting in consumers and producers making decisions that do not maximise welfare
67 of 90
Asymmetric information
Information not equally shared between two parties
68 of 90
Externality
An effect whereby those not directly involved in taking a decision are affected by the actions of others
69 of 90
Third party
Those not directly involved in making a decision
70 of 90
Private costs
The costs incurred by those taking a particular action
71 of 90
Private benefits
The benefits directly accruing to those taking a particular action
72 of 90
External costs
The costs that are the consequences of externalises to third parties
73 of 90
External benefits
The benefits that accrue as a consequences of external to third parties
74 of 90
Social costs
The total costs of a particular action
75 of 90
Social benefits
The total benefits of a particular action
76 of 90
Negative externality
This exists where the social cost of an activity is greater than the private cost
77 of 90
Positive externality
This exists where the social benefit of an activity exceeds the private benefit
78 of 90
Merit goods
These have more private benefits than their consumers actually realise
79 of 90
Demerit goods
Their consumption is more harmful than is actually realised
80 of 90
Public goods
Goods that are collectively consumed and have the characteristics of non rivalry and non excludability
81 of 90
Non excludability
Situation existing where individual consumers cannot be excusable from consumption
82 of 90
Free rider
Someone who directly benefits from the consumption of a public good but who does not contribute towards its provision
83 of 90
Non rivalry
Situation existing where consumption by one person does not affect the consumption of all others
84 of 90
Quasi-public goods
Goods having some but not all of the characteristics of a public good
85 of 90
Direct tax
One that races the income of people and firms and that cannot be avoided
86 of 90
Indirect tax
A tax that is levied on goods and services
87 of 90
Polluter pays principle
Any measure, such as green tax, whereby the polluter pays explicitly for the pollution caused
88 of 90
Subsidy
A payment, usually from government, to encourage production or consumption
89 of 90
Tradable permit
A permit that allows the owner to emit a certain amount of pollution and that, if unused or only partially used, can be sold to another polluter
90 of 90

Other cards in this set

Card 2

Front

Tangible products; i.e. products that can be seen and touched

Back

Goods

Card 3

Front

Intangible products; i.e products that cannot be seen or touched

Back

Preview of the back of card 3

Card 4

Front

Natural resources in an economy

Back

Preview of the back of card 4

Card 5

Front

The quantity and quality of human resources

Back

Preview of the back of card 5
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