economics unit 1 edexcel flashcards

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Scarcity
Insufficient resources to provide for everyone's wants
1 of 55
Opportunity Cost
The value of the next best alternative forgone
2 of 55
Renewable resource
A resource whose stock level can be maintained over a period of time
3 of 55
Non-renewable resource
A resource whose stock level decreases over time as it's consumed- it's finite
4 of 55
Production possibility frontier (PPF)
Maximum combinations of two goods that can be produced in an economy if all resources are fully and efficiently employed
5 of 55
Specialisation
When an individual, firm, region or country concentrates on the production of a limited range of goods and services
6 of 55
Division of labour
A form of specialisation where production is broken down into a series of tasks which are conducted by different workers
7 of 55
Free market economy
An economy in which the allocation of resources is souly based on the willingness and ability to pay. Allocation is left to the price mechanism
8 of 55
Centrally planned economy
An economy in which the government allocates resources
9 of 55
Positive statement
A value free statement that can be proved or disproved by references to facts
10 of 55
Negative statements
A value judgement statement which cannot be proved or disproved by reference to facts
11 of 55
Market
Where buyers and sellers meet for the purpose of exchange
12 of 55
Demand
The willingness and ability to purchase a good at a certain price
13 of 55
Price Elasticity of Demand (PED)
The responsiveness in demand for a good due to the change in its price
14 of 55
Total revenue
The total payments a firm received from selling a given quantity of goods or services (PXQ)
15 of 55
Income Elasticity of Demand (YED)
The responsiveness of demand for a good to change in real incomes
16 of 55
Normal good
When YED is positive, which means the variables of income and demand move in the same direction
17 of 55
Inferior good
When YED is negative, which means the variables of income and demand move in opposite directions
18 of 55
Cross Elasticity of Demand (XED)
The responsiveness of demand for one good to change on price of another
19 of 55
Substitutes
Positive XED
20 of 55
Compliments
Negative XED
21 of 55
Supply
The willingness to sell a good at a given price
22 of 55
Price Elasticity of Supply
The responsiveness of supply of a good due to a change in price of that good
23 of 55
Equilibrium
When there is a balance in the market, with no tendency for price or output to change
24 of 55
Consumer surplus
The difference between the price a consumer is prepared to pay for a good and the price they actually pay (area above price line)
25 of 55
Producer surplus
The difference between the price a producer is willing to sell their good for and the price they actually sell it for (area below price line)
26 of 55
Price mechanism
Where the "invisible hand" of the market allocates resources through the interaction of demand and supply
27 of 55
Direct Taxation
A tax levied directly on an individual or organisation
28 of 55
Indirect Taxation
A tax levied on the purchase of goods and services
29 of 55
Specific Tax
A tax added to the supply price, causing a left shift in the supply curve
30 of 55
Ad valorem Tax
A tax charged as a percentage of a good like VAT
31 of 55
Real income
The income that has been adjusted for inflation
32 of 55
Money income
Income that has not been adjusted for inflation and decreasing purchasing power
33 of 55
Derived demand
The demand placed on one good or service as a result of changes in the price for some other related good or service
34 of 55
Effective demand
The quantity of a good or service that consumers are actually buying at the current market rate
35 of 55
Rationing
The price mechanism allocates scarce resources to those buyers who are prepared to pay a higher enough price
36 of 55
Signalling
Price help to determine where and how resources should be allocated
37 of 55
Incentive
Prices act as an incentive to both buyers and sellers
38 of 55
Maximum price
"Price ceiling" A maximum price set by a regulator above which suppliers can not sell
39 of 55
Minimum price
"Price floor" A minimum price set by a regulator below which buyers cannot purchase
40 of 55
Subsidy
A grant given by the government to producers in order to reduce the production costs of a good thus providing and incentive to increase production
41 of 55
Minimum wage
The legal minimum hourly rate an employer can pay its workers
42 of 55
Market Failure
The price mechanism causes an inefficient allocation of resources
43 of 55
Externalities
The costs or benefits which are external to an exchange
44 of 55
Public Goods
Goods which display characteristics of non-rivalry, non-excludable and non-rejectable
45 of 55
Private Goods
Goods which are rivalrous and excludable
46 of 55
Labour immobility
Mobility of labour refers to the ability of workers to change from one job to another, both geographically and occupationally
47 of 55
External costs
When producing or consuming a good or service imposes a cost on the third party
48 of 55
External benefits
When producing or consuming a good or service causes a benefit to a third party
49 of 55
Welfare loss
Social costs exceed social benefits at a gradual output
50 of 55
Welfare gain
Social benefits exceed social costs at a gradual output
51 of 55
Geographical mobility of labour
The ability of labour to move from area to another to find work
52 of 55
Occupational mobility of labour
The ability of labour to change their type of occupation to find work
53 of 55
Buffer stocks
A system of interventionist buying and selling in order to maintain a target price and to reduce price fluctuations
54 of 55
Government Failure
Government intervention causes a misallocation of resources, leading to a net welfare loss
55 of 55

Other cards in this set

Card 2

Front

The value of the next best alternative forgone

Back

Opportunity Cost

Card 3

Front

A resource whose stock level can be maintained over a period of time

Back

Preview of the back of card 3

Card 4

Front

A resource whose stock level decreases over time as it's consumed- it's finite

Back

Preview of the back of card 4

Card 5

Front

Maximum combinations of two goods that can be produced in an economy if all resources are fully and efficiently employed

Back

Preview of the back of card 5
View more cards

Comments

izzy

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lots of great flashcards!

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