Unit 1 Economics Definitions (3) 3.0 / 5 based on 1 rating ? EconomicsASAQA Created by: RebeccaCreated on: 22-12-12 08:38 Monopoly A single seller of a product in a given market or industry 1 of 16 Ogliopoly A market dominated by a few large suppliers. (Typically 5 firms take over 60% of total market sales) 2 of 16 Negative Externality Occur when production/ consumption has external costs on 3rd parties for which no appropriate compensation is paid 3 of 16 Positive Externality When 3rd parties benefit from the 'spill-over' effects of production/ consumption 4 of 16 Production Possibility Frontier A boundary that shows the combinations of two or more products that can be produced using all resources efficiently 5 of 16 Price Elasticity of Demand Responsiveness of demand for a product to a change in price 6 of 16 Price Elasticity of Supply Responsiveness of supply for a product to a change in price 7 of 16 Producer Surplus Difference between what firms are willing and able to supply of a product (supply curve) and the price they actually recieve (market price) 8 of 16 Consumer Surplus The difference between what consumers are willing and able to pay for a product and what they actually pay 9 of 16 Social Benefit Private benefit + external benefit 10 of 16 Social Cost Private cost + external cost 11 of 16 Social Efficiency Social marginal benefit = Social marginal cost 12 of 16 Substitutes Goods in competitive demand and act as replacements for other products 13 of 16 Supply Shock An event that directly alters firms' costs and prices shifting the supply curve to the left or the right 14 of 16 Tragedy of the Commons When no-one owns a resource and it gets over-used 15 of 16 Variable Costs As production rises, a firm will face higher total variable costs as it needs to purchase extra resources to achieve expansion of supply 16 of 16
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