Theme 1.2 Key Word Cards

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Complementary Goods
These are bought in conjunction with each other, such as eggs and bacon, or cars and petrol.
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Inferior Goods
Ones for which sales fall when people are better off, but rise when consumers are struggling financially.
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Luxury Goods
Ones for which sales rise rapidly when people are better off.
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Normal Goods
Ones for which sales move in line with changes in consumer incomes, e.g. sale at dry cleaning outlets.
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Seasonal Variation
Change in the value of a variable (e.g. sales) that is related to the seasons.
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Substitutes
Products or services in competition with each other, so consumers will substitute one for the other.
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Market Price
The price of a commodity that has been established by the market - that is, where supply meets demand.
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Supply Chain
The whole path from suppliers of raw materials through production and storage onto customer delivery.
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Supply Curve
A line showing the quantity of goods firms want to supply at different price levels (the higher the price, the more enthusiastic the supply).
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Commodity Markets
These cover undifferentiated products such as rice, oil or gold. The principle is that every kilogram is the same as every other kilogram, so traders can buy and sell without needing to worry which kilo they are dealing in.
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Demand Curve
A line showing the demand for a product at different prices (the higher the price, the lower the demand).
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External Constraint
Something outside the firm's control that can prevent it achieving its objectives.
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Predatory Pricing
Pricing low with the deliberate intention of driving a competitor out of business.
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Price-Elastic
A product with demand that highly price sensitive, so price elasticity is above 1 .
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Price-Inelastic
A product with demand that is not very price sensitive, so price elasticity is below 1.
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Negative Income Elasticity
A product for which sales fall when people are better off (but rise when people are worse off).
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Positive Income Elasticity
A product for which sales rise when people are better off (but fall in recessions).
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Recession
Two or more quarters of negative economic growth.
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Demand
Measures the level of interest customers have in buying a product. To be effective, that interest must be backed by the ability to pay.
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Supply
The quantity of a product that producers are ale to deliver within a specific time period.
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Equilibrium
The point where there is a balance between supply and demand; this makes the price stable, although if the demand was high enough, the equilibrium point might be at a very high price.
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Price Elasticity
Measures the extent to which demand for a product changes when its price is changed.
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Income Elasticity
Measures the extent to which demand for a product changes when there is a change in consumers' real incomes. The shorthand YED is often used for income elasticity of demand.
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Other cards in this set

Card 2

Front

Ones for which sales fall when people are better off, but rise when consumers are struggling financially.

Back

Inferior Goods

Card 3

Front

Ones for which sales rise rapidly when people are better off.

Back

Preview of the back of card 3

Card 4

Front

Ones for which sales move in line with changes in consumer incomes, e.g. sale at dry cleaning outlets.

Back

Preview of the back of card 4

Card 5

Front

Change in the value of a variable (e.g. sales) that is related to the seasons.

Back

Preview of the back of card 5
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