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EDEXCEL IGCSE Economics 2024 > 1.1 The Market System > Flashcards

1.1 The Market System Flashcards

1
Q

Finite

A

Having an end or a limit

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2
Q

Infinite

A

Without limits

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3
Q

Basic economic problem

A

Allocation of a nation’s scarce resources between competing uses that represent infinite wants

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4
Q

Scarce resources

A

Amount of resources available when supply is limited

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5
Q

Opportunity cost

A

Cost of the next best alternative given up (when making a choice)

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6
Q

Expenditure

A

Spending by a government, usually a national government

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7
Q

Capital goods

A

Those purchased by firms and used to produce other goods such as factories machinery, tools and equipment

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8
Q

Consumer goods

A

Those purchased by households (food, confectionery, cars, tablets and furniture)

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9
Q

Production possibility curve (PPC)

A

Line that shows the different combination of two goods an economy can produce if all resources are used up

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10
Q

Economic growth

A

Increase in the level of output by a nation

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11
Q

Maximise

A

To increase something such as profit, satisfaction or income as much as possible

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12
Q

Revenue

A

Money that a business receives over a period of time especially from selling goods or services

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13
Q

Enterprise

A

Companies, organisations or businesses

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14
Q

Administration

A

Activities involved with managing and organising the work of a company or organisation

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15
Q

Demand curve

A

Line drawn a graph that shows how much of a good will be bought at different prices

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16
Q

Demand schedule

A

Table of the quantity demanded of a good at different price levels - can be used to calculated the expected quantity demand

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17
Q

Effective demand

A

Amount of goods people are willing to buy at given price over a given period of time supported by the ability to pay

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18
Q

Inverse relationship

A

(between price and quantity demanded) when price goes up, quantity demand falls and when price does down the quantity demand rises.

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19
Q

Shift in demand curve

A

Movement to the left or right of the entire demand curve when there is a change in any factor affecting demand expect the price

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20
Q

Factors that shift the demand curve

A

ATRIBE
Advertising
Taste and Preferences
Related goods prices (substitutes and compliments)
Income distribution (changes in income, normal/ inferior goods)
Buyers (population, number of consumers)
Expectations (future prices, seasonal)

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21
Q

Disposable income

A

Income that is available to someone over a period of time to spend; it includes state benefits but excludes direct taxes

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22
Q

Inferior goods

A

Goods for which demand will fall if income rises or rise if income falls

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23
Q

Normal goods

A

Goods for which demand will increase if income increases or falls if income falls

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24
Q

Substitute goods

A

Goods bought as an alternative to another but perform the same function

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25
Q

Complementary goods

A

Goods purchased together because they are consumed together

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26
Q

Supply

A

Amount that producers are willing to offer for sale at different prices in a given period of time

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27
Q

Supply curve

A

Line drawn on a group which shows how much of a good sellers are willing to supply at different prices

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28
Q

Proportionate relationship

A

(between price and the quantity supplied) when price goes up, the quantity supplied also goes up and when price goes down, quantity supplied also goes down

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29
Q

Shift in the supply curve

A

Movement to the left or right of the entire supply curve when there is any change in the conditions of supply expect for price

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30
Q

Factors that shift the supply curve

A

STORES
Subsides and Taxes
Technology
Other related goods prices (joint or competitive)
Expectations of producers (future prices)
Size of the market

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31
Q

Indirect taxes

A

Taxes levied on spending such as VAT

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32
Q

Consumption

A

Amount of goods, services, energy, or natural materials used in a particular period of time

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33
Q

Subsidy

A

Money that is paid by a government or organisation to make prices lower, reduce the cost of producing goods or providing a service, usually to encourage production of certain goods

34
Q

Equilibrium price

A

Price at which supply and demand are equal

35
Q

Market clearing price (equilibrium price)

A

Price at which the amount supplied in a market matches exactly the amount demanded

36
Q

Total revenue

A

Amount of money generated from the sales of goods calculated by multiplying price by quantity (TR = P x Q)

37
Q

Excess demand

A

Where demand is greater than supply and there are shortages in the market

38
Q

Excess supply

A

Where supply is greater than demand and there are unsold goods in the market.

39
Q

Price elasticity of demand (PED)

A

The responsiveness of demand to a change in price

40
Q

Inelastic demand

A

Change in price results in a proportionally smaller change in quantity demanded (price inelastic)

41
Q

Elastic demand

A

Change in price results in a proportionally greater change in the quantity demanded (price elastic)

42
Q

Price elasticity of demand (PED)

A

PED = % change in quantity demanded / % change in price

43
Q

Perfectly elastic

A

Demand where PED = infinite (an increase in price will result in zero demand)

44
Q

Perfectly inelastic

A

Demand where PED = 0 (a change in price will result in no change in the quantity demanded)

45
Q

Unitary elasticity

A

Where PED = -1 (the responsiveness of demand is proportionally equal to the change in price)

46
Q

Factor of PED (price elasticity of demand)

A

SPLAT-B
Substitues
Perfect angle of income
Luxury/Necessity
Addictiveness
Time
Brand loyalty

47
Q

Price elasticity of supply (PES)

A

Responsiveness of supply to a change in price

48
Q

Inelastic supply

A

Change in price results in a proportionally smaller change in quantity supplied (price inelastic)

49
Q

Elastic supply

A

Change in price results in a proportionally greater change in quantity supplied (price elastic)

50
Q

Price elasticity of supply (PES) calculate

A

PES = % change in quantity supplied / % change in price

51
Q

Perfectly elastic

A

PES = infinite (producers will supply an infinite amount at the given price)

52
Q

Perfectly inelastic

A

PES = 0 (the quantity supplied is fixed and cannot be adjusted whatever the price)

53
Q

Unitary elasticity

A

PES = 1 (a change in price will be matched by an identical change in the quantity supplied)

54
Q

Factors of PES (price elasticity of supply)

A

FAST
Factor of production
Availability in stocks
Spare capacity
Time

55
Q

Income elasticity of demand (YED)

A

Responsiveness of demand to a change in income

56
Q

Income elasticity of demand (YED)

A

% change in quantity demanded / % change in income

57
Q

Interpreting value (YED)

A

Normal Necessity (between 0 - 1) (positive)
Normal Luxury (more than 1)
Inferior (less than 0) (negative)

58
Q

Excise duty

A

Government tax on certain goods (such as cigarettes), alcoholic drinks and petroleum that are sold in the country

59
Q

Valued-added tax (VAT)

A

Tax on some goods and services - business pay valued-added tax on most goods and service they buy and if they are VAT registered, charge value-added tax on the goods and services they sell.

60
Q

Economy

A

system that attempts to solve the basic economic problem

61
Q

Private Sector

A

provision of goods and services by businesses that are owned by individuals or groups of individuals

62
Q

Public Sector

A

government organisations that provide goods and services in the economy.

63
Q

Shareholders

A

people or organisations that owns shares in a company

64
Q

Dividend

A

part of a company’s profit that is divided among with the people with shares in the company

65
Q

Assets

A

things or resources belonging to an individual or business that has value or power to earn money

66
Q

Liabilities

A

amount of debt that is owed or must be paid.

67
Q

Market failure

A

where market leads to inefficiency

68
Q

Mixed economy

A

economy where goods and services are provided by both the private and public sectors.

69
Q

Merit goods

A

goods that are under-provided by the private sector

70
Q

Public goods

A

goods that are not likely to be provided by the private sector. (non-excludability) (non-rivalry)

71
Q

Free-rider

A

individual who enjoys the benefits of a good but allows others to pay for it.

72
Q

Privatisation

A

act or selling a company or activity controlled by the government to private investors.

73
Q

Monopolies

A

situation where a business activity controlled by only one company or by the government, and other companies do not compete with it,

74
Q

Nationalised industries

A

public corroborations previously part of the private sector that were taken into state ownership

75
Q

Natural monopolies

A

situation that occurs when one firm in a industry can serve the entire market at a lower cost than would be possible if the insured were composed of many smaller firms

76
Q

Diversified

A

if a company or economy diversifies, it increases the range of goods or services it produces

77
Q

Hostile takeover

A

Takeover that the company being taken over does not want or agree to

78
Q

Takeovers

A

Act of getting control of a company by buying over 50% of its shares

79
Q

Spillover effect

A

Effect that one situation or problem has on another situatiom

80
Q

External costs

A

Negative spillover effect of consumption / production that negatively affect third parties

EDEXCEL IGCSE Economics 2024 (4 decks)

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