Atm Key words

Question 1

Economic welfare

Answer 1

The benefit or satisfaction and individual or society gets from the allocation of resources

Question 2

Opportunity cost

Answer 2

The next best alternative forgone

Question 3

Economic goods

Answer 3

It’s that are scarce therefore have an opportunity cost

Question 4

Free goods

Answer 4

Goods that have no opportunity cost. for example, air

Question 5

Factor markets

Answer 5

Market for factors of production the make of the goods and services such as labour and raw materials

Question 6

Free market economy

Answer 6

Limited government involvement in providing goods and services, prices and output is determined by the forces of supply and demand

Question 7

Production possibility boundary

Answer 7

Indicates the max output possible achieved with fixed set of resources and technology at the time

Question 8

Productive efficiency

Answer 8

Firm operates at minimum average cost that produces the maximum possible output from inputs

Question 9

Allocative efficiency

Answer 9

A cheat when a firm is supplying what consumers are demanding. Also it is not possible to make someone better off without making someone worse off, or you cannot make more goods without making less of another, P equals MC

Question 10

Productivity

Answer 10

A measure of efficiency; ratio of inputs to outputs

Question 11

Valued judgement

Answer 11

Statements or opinions expressed that are not testable

Question 12

Normative statement

Answer 12

Opinions that require value judgements to be made

Question 13

Positive statement

Answer 13

Statements that can be tested against world data

Question 14

Market demand

Answer 14

Total demand in the market for a good, sum of all individuals demand at each given price level

Question 15

Normal good

Answer 15

Because of services which will increase in demand as incomes rise

Question 16

Composite demand

Answer 16

Are good that has more than one purpose, as the demand for one purpose rises the supply for the other decreases

Question 17

Supply

Answer 17

The amount produces plants produce at a given price level. There is a positive relationship between price and supply

Question 18

Extension supply

Answer 18

Increase in supply because the market prices risen

Question 19

Contraction in supply

Answer 19

Amount offered for sale is reduced because the price level has fallen

Question 20

Joint supply

Answer 20

Production of one good results in the production of another

Question 21

Equilibrium

Answer 21

Price at which the man is equal to Supply

Question 22

Disequilibrium

Answer 22

Where supply does not equal demand

Question 23

Demand

Answer 23

Amount of a product that consumers are willing and able to purchase at different prices over a period of time. There is a negative correlation between price and demand

Question 24

Excess supply

Answer 24

Supply out of the ticket the price is greater than demand-lower prices

Question 25

Excess demand

Answer 25

Demand is greater than supply-increase price

Question 26

Maximum price

Answer 26

Price ceiling above which price is not allowed to increase

Question 27

Minimum prices

Answer 27

Price floor below which the price is not allowed to decrease any further

Question 28

Price elasticities of demand

Answer 28

How responsive demand is to a change in the price level

Question 29

Price elasticities of supply

Answer 29

How responsive supplies to a change in the price level

Question 30

Cross elasticities of demand

Answer 30

Measures the relationship between two different products

Question 31

Incidence of tax

Answer 31

The proportion of tax that is passed on to the consumer

Question 32

Income elasticities of demand

Answer 32

Proportion to which demand changes when there is a change in income

Question 33

Inferior products

Answer 33

These products have a negative income elasticities of demand

Question 34

Market failure

Answer 34

Where the free market fails to produce what consumer require at the lowest possible cost. I.e. economic efficiency is not achieved. There will also not be an equitable distribution of resources

Question 35

Buffer stock

Answer 35

And intervention system which aims to limit fluctuations of the price of the commodity

Question 36

Derived

Answer 36

When the demand for a good or service comes from the demand for another good or service

Question 37

Substitutes

Answer 37

Goods that can be used as alternatives to other goods

Question 38

Compliments

Answer 38

Goods that are consumed together

Question 39

Factor market

Answer 39

The market for the factors of production that make other goods and services such as labour and raw materials

Question 40

Setter asparagus

Answer 40

All of the factors remain equal

Question 41

Infrastructure

Answer 41

Man-made environment. Includes transport and communication networks

Question 42

Economies of scale

Answer 42

Reduction in average costs as the firm expands its output

Question 43

Diseconomies of scale

Answer 43

Increase in average costs as the firm expands its output

Question 44

External economies of scale

Answer 44

Reduction in the firms average cost because the industry/area has grown or improved. The firm may stay the same size but it is benefiting from being part of a flourishing industry or area.

Question 45

Consumer surplus

Answer 45

The difference between the total amount that consumers are willing and able to pay for a good or service and the total amount that they actually do pay. Consumer surplus a shame but the area under the demand curve and above the price

Question 46

Producer surplus

Answer 46

The difference between the price that produces are willing and able to supply a good four and the price that they actually receive. Produces a plus a shame but the area above the supply curve the below the price.

Question 47

National Wealth

Answer 47

Is the Value of a countries assets minus its liabilities

Question 48

Gross National Product

Answer 48

GDP plus and minus it's money in and out from abroad.

Question 49

Multiplier Effect

Answer 49

The number of times a rise in national income exceeds the rise in injections of demand that caused it. k = 1/1-mpc

Question 50

National income

Answer 50

The flow of new output produced by the economy in a particular period

Question 51

National Output

Answer 51

The same as national income, namely the flow of new output produced by the economy in a particular period

Question 52

Accelerator Effect

Answer 52

When national output increases disproportionately as investment increases, further increasing national output at a faster rate