Competitive Markets: Demand and Supply Flashcards
Economics
The study of the production of goods and services and the consumption of these goods and services
Macroeconomics
The branch of economics that studies the working of the conomy as a whole or large sections
Microeconomics
the branch of economics that studies individual units and the way in which they make economic decisions
Positive Statement
A statement that can be verified by empirical observation
Normative Statement
a value judgement about what should happen
Scarcity
A situation where there are unlimited wants but limited resources
Resource allocation
The way in which the resources are split between their various uses
Factors of production
Land, labour, capital, enterprise
Ceteris Paribus
All things being equal - assuming that everything else is held constant
Choice
How resources are allocated to deal with economic problems
Utility
Benefits gained from consuming goods and services
Opportunity Cost
cost measured in terms of the next best alternative
Economic good
goods that people want that are scarce
Free good
commodities that have no price and no opportunity cost (e.g. air, sunshine)
Production possibility curve
A curve that shows all possible combinations of two goods that a country can produce in a specified time with all resources fully and efficiently used
Public sector
The part of the economy where goods and services are provided by the government
Private sector
The part of the economy that is characterized by private ownership of the means of production by profit seeking individuals
Command Economy
economy where all economic decisions are made by a central authority
Free Market Economy
An economy where all economic decisions are made by individual households and firms, no government intervention
Mixed economy
An economy where economic decisions are made partly by the government and partly through the market
Sustainable Development
Development that meets the needs of the present without compromising the ability of future generations to meet their own needs
Economic growth
the increase in a country’s output over time, an increase in national income
Economic Development
The standard of living
Market
an organization through which goods and services are exchanged, does not have to be physically, and can be local, national or international
Price mechanism
the process by which prices rise or fall as a result of changes in demand and supply. Signals and incentives are used to increase or decrease prices
Monopolistic competition
A market structure where each firm produces a differentiated product and have some control over the price
Oligopolistic competition
Market structure dominated by only a few firms or where a product is supplied by only a afew firms
Monopoly
There is only one dominant firm in the industry (e.g. Microsoft)
