Deck 2 (D-G) Flashcards
Demand
The quantity of a good or service that consumers are willing and able to to buy at any possible price in a given time period
Demand curve
A graph showing how much of a good will be demanded by consumers at any given price
Demerit good
A good that brings less benefit to consumers than they expect, such that too much will be consumed by individuals in a free market
Derived demand
Demand for a factor of production which derives not from the factor itself, but from the goods it produces
Division of labour
A process whereby the production procedure is broken down into a sequence of stages, and workers are assigned to particular stages
Economic efficiency
A situation in which both productive and allocative efficiency have been reached
Economies of scale
Occur when a firm increases the scale of its production leading to a reduction in the long-run average cost
Elasticity
A measure of the sensitivity of one variable to changes in another variable
Excess burden of a sales tax
The deadweight loss to society following the imposition of a sales tax
External cost
A cost that is associated with an individual’s (a firm or household’s) production or other economic activities, which is borne by a third party
Externality
A cost or a benefit that is external to the market transaction, and is thus not reflected in market prices
Factors of production
Resources used in the production process; inputs into production - capital, entrepreneurship, land and labour
Firm
An organisation that brings together factors of production in order to produce output
Fixed costs
Costs incurred by a firm that do not vary with output
Free market economy
An economy in which resource allocation is guided by market forces without intervention from the state
