Economics unit one

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Ad valorem tax
Is a tax that is charged as a percentage of the price of a good eg VAT
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Asymmetric Information
Is where consumers and producers receive imperfect and unequal market information on a good or a service
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Buffer Stock
A stockpile of a commodity which and agency adds to or takes from, to reduce price fluctuation and stabiles producer incomes in a market.
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Capital
Man-made resources used to produce goods and services.
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Carbon offsetting
A scheme which enables consumers or producers to offset their carbon emissions by paying for the removal of the same amount of carbon emissions from elsewhere.
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Complementary Good
These are goods in joint demand. a FALL in the price of one good will cause and INCREASE in the demand for other good eg tennis racket and tennis balls. THEY HAVE A NEGATIVE ELASTICITY OF DEMAND!
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Consumer Surplus
Is the difference between the price a consumer is willing to pay and the price they actually pay.
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Derived Demand
The demand for labour is derived from the demand for what it produces.
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Division Of Labour
The break down of the production process into different tasks where labour is allocated into specific tasks.
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Economics
The allocation a scares resources to provide for unlimited human wants.
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Externalities
Cost or benifits which are external to an exchange. they have third party effects ignored my the price mech.
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External Benefit
Benefits which are external to and exchange. They are positive third party effects which price mech fails to take into account.
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External Cost
Cost which are external to and exchange. They are negative third party effects which price mech fails to take into account.
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Free Market Economy
An economy where decisions on what, how and for whom to produce was left to the operation of the price mech.
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Government Failure
Govt intervention in a market leads to net welfare loss. It is where govt intervention causes an inefficient allocation of resources.
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Immobility of labour market
The geographical and occupational barriers which restrict the ability of labour to move from one job to another. GEOGRAPHICAL: refer to barriers to the movement of the labour between areas. OCCUPATIONAL: barriers to changing jobs.
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Indirect tax
It represents a tax on expenditure levied on suppliers by the government causing a decrease in supply it acts like an increase in costs.
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Inferior good
A good which have a NEGATIVE YED as incomes rise demand fall as income falls demand for the good rises.
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Market equilibrium
This is where the quantity demand equals the quantity supply of a good or service. An equilibrium price is determined for position.
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Market Failure
The price mechanism causes an inefficent allocation of resources. It is when the forces of demand and supply lead to a net welfare loss in society.
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Minimum price
A legally imposed price floor, below which the market price of a good or service cannot fall.
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Minimum wage
A legally imposed wage floor, below which the market wage cannot fall in a labour market.
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Mixed economy
An economy where decisions on what, how and for whom to produce are made partly by the price mech and partly by the government. Most developed economises are mixed economies.
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National Minimum wage
A legally imposed wage floor across all labour markets in the uk.
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Normal good
A good which has a POSITIVE INCOME ELASTICITY OF DEMAND. As income rises, so will demand for the good rise; as income falls, so will demand for the good fall.
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Normative statement
This is subjective statement containing a value judgement and cannot be tested as true or false.
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Opportunity cost
The value of the next best alternative forgone.
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Positive statement
This is an objective statement which can be tested as true or false with reference to facts and figures.
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Price mechanism
The process in which changes in demand or supply cause price to change, leading to a new equilibrium positon in the market.
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Privet benefits
Benefits which are internal to an exchange. Benefits which are directly received by a firm or individual.
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Privet Costs
Costs which are internal to an exchange. These are costs the firm or consumer directly pays for.
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Private Good
A good which possesses the characteristics of rivalry and excludability in consumption.
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producer surplus
the difference between the price a firm was willing to supply for and price they receive
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production possibility frontier
the maximum potential level of output for two goods or services that an economy can achieve when all its resources are fully and efficiently employed
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property right
the provision of rights over the ownership of resources, to what uses they can be put to and what rights others have over them. An extnsion of property rights has been applied to the seas, rivers, mountains and air in certain areas.
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public good
a good wihch possesses the characteristics of non-excludability and non-rivalry. Non-excudability means that once a good has been produced for the benefit of one person, it is impossible to stop others from benefiting.
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Quasi-public good
a good which possess the characteristics of public goods
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Renewable energy certificates
certificates awarded to power generation firms who produce electricity from renewable sources.
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Scarcity
Insufficient resources are available for everyone's materials wants.
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Social Benefit
the total benefit to society of an economic activity. It is the addition of private benefit and external benefit.
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Social cost
the total cost to society of an economic activity. it is the addition of private cost and external cost.
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Social Optimum
The level of output or price where marginal social cost equals marginal social cost equals marginal social benefit
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Specialisation
the concentration of resources on particular tasks or the production of a limited range of goods.
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Specific tax
a tax charged as a fixed amount per unit of a good, acts like an increase in cost of production. for example, each litre of wine or a packet of cigs. it is a type of indirect tax. An excise tax is a good example.
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Subsidy
a grant usually provided by government, to encourage suppliers to increase production of a good or service leading to a fall in its price.
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subsitute goods
Goods which are alternatives for each other. A fall in pirce of one good will cause a decrease in demand for the other good.
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Other cards in this set

Card 2

Front

Is where consumers and producers receive imperfect and unequal market information on a good or a service

Back

Asymmetric Information

Card 3

Front

A stockpile of a commodity which and agency adds to or takes from, to reduce price fluctuation and stabiles producer incomes in a market.

Back

Preview of the back of card 3

Card 4

Front

Man-made resources used to produce goods and services.

Back

Preview of the back of card 4

Card 5

Front

A scheme which enables consumers or producers to offset their carbon emissions by paying for the removal of the same amount of carbon emissions from elsewhere.

Back

Preview of the back of card 5
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