Economics: How markets work 0.0 / 5 ? EconomicsCompetitive marketsASEdexcel Created by: samstarrzCreated on: 12-04-14 15:20 The loss of the value of the next best alternative foregone Opportunity cost 1 of 34 Wants are infinite but resources are finite Scarcity 2 of 34 Stock levels can be maintained over a period of time Renewable resource 3 of 34 Stock levels are depleted over time due to economic exploitation Non-renewable resource 4 of 34 A curve showing the maximum amount of goods and services that can be produced with a given level of resources Production possibility frontier (PPF) 5 of 34 Where an individual, firm, region, country concentrates on the production of a limited range of goods and services Specialisation 6 of 34 Where the production process is broken down into a sequence of stages and workers are assigned to a particular stage Division of labour 7 of 34 Where resources are allocated by the price mechanism Free market economy 8 of 34 Where resources are allocated by the government Centrally planned economy 9 of 34 Where resources are allocated partly by price signals and partly by state intervention Mixed economy 10 of 34 A statement of fact, that can be tested true or false Positive statement 11 of 34 A statement containing value judgement Normative statement 12 of 34 The responsiveness of the quantity demanded to a change in price Price elasticity of demand 13 of 34 Shifts in the demand curve TISC 14 of 34 If PED is greater than 1 Elastic 15 of 34 If PED is less than 1 Inelastic 16 of 34 If PED is equal to 1 Unitary elasticity 17 of 34 Price x Quantity Revenue 18 of 34 If you increase price, revenue will increase if... Inelastic good 19 of 34 If you decrease price, revenue will increase if... Elastic good 20 of 34 The responsiveness of the quantity demanded to a change in income Income elasticity of demand 21 of 34 If YED is negative Inferior good 22 of 34 If YED is positive Normal good 23 of 34 The responsiveness of the quantity demanded of good A following a change in the price of good B Cross elasticity of demand 24 of 34 If XED is positive Substitutes 25 of 34 If XED is negative Compliments 26 of 34 Shifts in supply curve Cost of production change 27 of 34 The responsiveness of the quantity supplied to a change in price Price elasticity of supply 28 of 34 Functions of the price mechanism Rationing, signalling, incentive 29 of 34 A tax on expenditure Indirect tax 30 of 34 A tax of a specific amount added to the price of the good Specific tax 31 of 34 A tax as a percentage of the price of the good Ad valorem tax 32 of 34 A grant from the government to encourage consumption Subsidy 33 of 34 The demand for the good or service it produces not the labour itself Derived demand 34 of 34
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