Unit 1

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Needs
Something essential to survival - food, water, warmth, clothing and shelter
1 of 47
Wants
Something you would like to have, but is not essential to survival - for example cars, mobile phones and chocolate
2 of 47
Resources
Something used to produce output
3 of 47
Labour
Human input into the production process
4 of 47
Land
Land itself and all the natural resources on and below the land for production
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Capital
Goods used to produce other goods and services
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Enterprise
Having ideas and taking risks in setting up or running a business
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Productivity
Output per worker per period of time
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Primary
Where extraction of war materials takes place e.g. Mining, farming, fishing
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Secondary
Where the raw materials are manufactured into goods e.g. car manufacture, factory
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Tertiary
The service sector e.g. banking, tourism, education
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Opportunity Cost
The next best alternative forgone when making a choice - what we give up when we make a choice
12 of 47
Market
Where buyers and sellers meet to exchange goods and services. This does not have to mean a face-to-face meeting
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Market Economy
Where all resources are allocated by private individuals and groups
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Planned economy
Where all resources are allocated by the government
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Mixed economy
Where some resources are allocated by the government, and other resources are allocated by private individuals and groups
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Public sector
The government sector of the economy, where organisations are owned and run by the government
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Private sector
The sector of the economy where firms are owned and run by private individuals and groups - their main aim is profit maximisatino
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Surplus
When more is produced than is required. The surplus can be exchanged for money or other goods/services
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Competitive market
A market situation in which there are a large number of buyers (demand) and sellers (supply)
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Monopoly
A situation where there is only one firm selling in a market. e.g. royal mail
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Monopoly power
Where a firm has more than 25% of the market share. e.g. Tesco
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Demand
The quantity buyers are willing and able to buy at a given prive in a given period of time
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Contraction of demand
the fall in the quantity demanded due to a rise in price
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Extension of demand
the increase in quantity demanded due to a fall in price
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Inferior goods
Goods for which the demand falls when income rises. e.g. Bus
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PED=
percentage change in the quantity demanded/ percentage change in price
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Total revenue
The amount of money a firm receives when selling its product. Total revenue = Price x quantity sold
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PES=
percentage change in quantity supplied/percentage change in price
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Equilibrium
The point where demand and supply meet
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Specific tax
A tax placed on a good or service which is a specific amount of money per unit bought
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Ad valorem tax
A tax placed on a good or a sevice which is a percentage of the price
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Subsidy
A payment given to a firm, usually by the government
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Output
The number of goods or services produced by a firm
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Fixed costs
Costs that do not vary with output
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Variable costs
Costs that vary directly with the output
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Profit =
Total revenue - total costs
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Merger
agreed coming together of two firms
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Takeover
When one firm seeks to take control of another
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Integration
This occurs when two firms come together through either a merger or a takeover
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Internal economies of scale
When one firm grows in size and so benefits from lower average costs
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External economies of scale
When a whole industry grows in size, so a firm within that industry benefits from lower average costs.
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Diseconomies of scale
When a firm grows too large and average costs start to rise
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Grooss income
Before deductions such as income tax, national insurance and pension
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Net income
After deductions. Gross income - deductions
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National minimum wage
A pay floor introduced by the government, which sets a wage level below which producers cannot legally go
46 of 47
Specialisation
when a nation or individual concentrates its productive efforts on producing a limited variety of goods
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Other cards in this set

Card 2

Front

Something you would like to have, but is not essential to survival - for example cars, mobile phones and chocolate

Back

Wants

Card 3

Front

Something used to produce output

Back

Preview of the back of card 3

Card 4

Front

Human input into the production process

Back

Preview of the back of card 4

Card 5

Front

Land itself and all the natural resources on and below the land for production

Back

Preview of the back of card 5
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