Unit 1 Key Terms

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  • Created by: Emilyy11
  • Created on: 19-03-14 16:51
Needs
something essential to survival - food, warmth, clothing and shelter
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Wants
something that you would like to have, but s not essential to survival - cars, mobile phones and chocolate
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Resources
something used to produce output
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Productivity
output per worker per period of time
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Opportunity cost
the next best alternative foregone when making a choice - what we give up when making a choice
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Market
where buyers and sellers meet to exchange goods and services. This does not have to be 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 and maximisation
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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. For example, before 2006 Royal Mail was a monopoly, being the only firm to provide the service of letter delivery
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Monopoly power
when a firm has more than 25% of the market share. Tesco has a legal monopoly in the supermarket industry, it holds approximately 31% of the market share. This means that 31% of all supermarket sales happen in Tesco
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Demand
the quantity buyers are willing and able to buy at a given price in a given period of time
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Effective demand
for demand to be effective a consumer must be both willing and able to buy the good or service. 'Willing' means they want it; 'able' means they have money to buy it.
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Inferior goods
goods for which the demand falls when income rises. An example may be bus journeys.
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Total revenue
the amount of money a firm receives when selling its product (not considering total costs)
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Supply
the quantity a producer is willing and able to produce at a given price in a given time period
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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, for example £2 tax on each bottle of wine
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Ad valorem tax
a tax placed on a good or a service which is a percentage of the price
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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 (e.g. rent)
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Variable costs
costs that vary directly with output (e.g. raw materials)
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Total revenue
the amount a firm receives from selling its product
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Production
the process of combining scarce resources to make an output
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Productivity
output per worker per period of time
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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 (this can be either friendly or hostile)
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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 (increases output) 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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National minimum wage
a pay floor introduced by the government, which sets a wage level below which producers cannot legally go
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Other cards in this set

Card 2

Front

something that you would like to have, but s not essential to survival - 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

output per worker per period of time

Back

Preview of the back of card 4

Card 5

Front

the next best alternative foregone when making a choice - what we give up when making a choice

Back

Preview of the back of card 5
View more cards

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