Economics Unit 1

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  • Created by: Alice
  • Created on: 28-04-13 21:54
Positive Statement
A statement that can be proved of disproved, it is objective.
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Normative Statement
A value judgement, a subjective opinion.
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Scarcity
The concept that there are only a finite amount of resources in the world i.e. coal and oil.
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Opportunity cost
Is the next best alternative you miss out on when purchasing a good or service.
4 of 20
Production possibility frontier (PPF)
This shows the maximum possible output of an economy when all resources are used.
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Division of Labour
Adam Smith - dividing up labour into small repetitive tasks to increase productivity and efficiency.
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Price Elasticity of Demand (PED)
Measures the responsiveness of demand to any change in price (% change in demand/ % change in price) normally negative.
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Giffen good
A good that has snob appeal (a positive PED) i.e. Fashionable clothing.
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Cross elasticity of demand (XED)
Measures the responsiveness of the demand for one good to a change in price of another good (% change in demand of X/% change of the price of Y) complimentary goods have negative XED, substitute goods have a positive XED.
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Income Elasticity of Demand (YED)
Measures the responsiveness of demand to any change in income. (% change in demand/ % change in income) normally positive.
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Price Elasticity of Supply (PES)
Measures the responsiveness of supply to any change is price ( %change in supply/ % change in price) Generally always positive.
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Ad Velorum Tax
Tax that is proportional to the price of a good. (i.e VAT 20%)
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Consumer Surplus
Measures the difference between the price a consumer is willing to pay the the price they actually pay.
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Producer Surplus
Measures the difference between the price the price a producer is willing to sell a good/service for and the price they actually sell for.
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Occupational Mobility
This refers to how easy it is for labour to move between different jobs.
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Geographical Mobility
THis refers to how easy it is for labour to move to different parts of the country.
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National Minimum Wage
The lowest legal amount that labour is allowed to be supplied for.
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Market Failure
This is where the price mechanism leads to a net welfare loss to society and an inefficient allocation of resources.
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Merit goods
Goods with positive social benefits i.e vaccinations.
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Demerit goods
Demerit goods habe negative external costs i.e cigarettes.
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Other cards in this set

Card 2

Front

A value judgement, a subjective opinion.

Back

Normative Statement

Card 3

Front

The concept that there are only a finite amount of resources in the world i.e. coal and oil.

Back

Preview of the back of card 3

Card 4

Front

Is the next best alternative you miss out on when purchasing a good or service.

Back

Preview of the back of card 4

Card 5

Front

This shows the maximum possible output of an economy when all resources are used.

Back

Preview of the back of card 5
View more cards

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