ECONOMICS UNIT 1 Part 5

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Opportunity Cost
Cost expressed in terms of the next best alternative that is foregone
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Normative Economic Statement
An economic statement that is based on value judgement
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Positive Economic Statement
An economic statement that can be tested in order to determine whether or not it is true
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Production Possibility Frontier
A diagram that shows all the combinations of two goods that can be produced when all factors of production are being used
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Demand Curve
A demand curve shows how much people are willing and able to buy at each price
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Supply Curve
A supply curve shows how much suppliers are willing and able to supply at each price
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Consumer Surplus
The difference between the maximum amount of money consumers are willing to pay for a product and the actual market price
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Producer Surplus
The revenue received by producers above that which would have brought the product onto the market for sale
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Efficiency
How close a firm is to producing at the lowest possible average cost
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Productivity
Measures the efficiency with which resources are used. Often taken to mean output per person employed
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Division of labour
The way in which tasks in the production process are allocated to different people
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Buffer Stock
A reserve of a commodity held to stabilise commodity prices. The stocks are usually held by an organisation that is separate from the producers- often the government
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Price Floor
A floor below which prices are not allowed to fall- a minimum price
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Price Ceiling
A ceiling above prices are not allowed to be raised- a maximum price
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Economies of Scale
where an increase in the scale of production leads to reductions in average total cost for firms
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Diseconomies of Scale
where an increase in the scale of production leads to increases in average total costs for firms
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Other cards in this set

Card 2

Front

An economic statement that is based on value judgement

Back

Normative Economic Statement

Card 3

Front

An economic statement that can be tested in order to determine whether or not it is true

Back

Preview of the back of card 3

Card 4

Front

A diagram that shows all the combinations of two goods that can be produced when all factors of production are being used

Back

Preview of the back of card 4

Card 5

Front

A demand curve shows how much people are willing and able to buy at each price

Back

Preview of the back of card 5
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