Chapter 1-7 Flashcards
List Factors of Production
Land
Labour
Entrepreneurship
Capital
Demand
Quantity of a good or service consumers are willing and able to purchase at different price levels in a given period of time
Supply
The quantity of a good or service that producers are willing and able to supply at different prices in a given time period
Definition of PED
A measure of how much the demand for a product changes when there is a change in the price of the product
Definition of PES
A measure of how much the supply of a product changes when there is a change in the price of a product
Definition of YED
A measure of how much the demand for a product changes when there is a change in the consumer’s income
Equation for PED
% ± in quantity demanded of the product / % ± in price of the product
Equation for PES
% ± in quantity supplied of the product / % ± in price of the product
Equation for YED
% ± in quantity demanded of the product / % ± in the income of the consumer
Utility
The satisfaction or usefulness that a product provides for a consumer
Surplus
When there is an abundance of a good
Shortage
When there is not enough supply to meet demand
Inferior Goods
Considered a cheap product or a knock off from a high quality brand
Necessity Goods
Products that have low income elasticity. The demand for them will change very little if income increases
Superior Goods
Goods that have high income elasticity. The demand for them changes significantly as income rises
Normal Goods
A type of a good which experiences an increase in demand due to an increase in income
Prime Commodities
The term for raw materials such as cotton and coffee, that have a relatively inelastic demand
Consumer Surplus
An economic measurement of consumer benefits resulting from market competition
Producer Surplus
The total amount that a producer benefits from producing and selling a quantity of a good at the market price
Market Equilibrium
A state of rest, self perpetuating in the absence of any outside disturbance
Short Run
The time it takes to increase one FOP
Long Run
The time it takes to resolve all FOP
Definition of PPC
The Production Probability Curve (PPC) is the opportunity cost between two goods
Opportunity Cost
when you give something up in order to have something else (“trade-off”)
Positive Economics
Economics based on facts and previous examples / The objective analysis in the study of economics
Normative Economics
How things should be done
Goods
Items of physical substance that add some kind of benefit to the lives of the people who consume them
Service
An act or use for which a consumer, firm, or government is willing to pay
Fake good
Are Goods without scarcity (is this right?)
Economic Goods
Are goods with scarcity and opportunity cost
Primary Sector
Industries that extract raw materials - Primary products are created from this sector
Secondary Sector
Industries that take primary products and use them to make producer goods
Tertiary Sector
Industries that provide services or intangible products
Subsidy
a sum of money granted by the government to help an industry keep the price of a commodity or service low.
Indirect Tax
a tax on consumer products that provide revenue for governments
Indirect tax: specific tax
a fixed tax that is imposed upon a product
merit good
a merit good is a good which when consumed provides external benefits, these may not always be recognised, meaning the good is under-consumed.
