Definition and Key-terms Flashcards
memorising definitions
Resources
Inputs available for the production of goods and services
Opportunity cost
cost express in terms of the next best alternatives that is forgone when a choice is made
Land
natural resources
labor
human resources available
capital
physical resources made by humans that aid the production of goods and services
Enterprise
Organising production and taking risks
Specialisation
Individuals/firm/economies concentrate on producing those goods and services where they have an advantage over others
Division of labor
Manufacturing processes split into sequence of individual tasks
Market economy
An economic system where most decisions are taken through market mechanism
Planned economy
Resources are state owned and allocated by a central body
Mixed economy
Both market forces and government allocate resources
Market/price mechanism
Allocations of resources by individual producers without government intervention
Excludability
When it is possible to stop someone from consuming goods or services
Rivalry
When consumption of one good reduces the availability of the good or services to others
Non-rivalry
When the consumption of one good doesn’t reduce the consumption of the goods to others
Private good
Goods that are consumed by one person and become unavailable to others
Free good
Goods that are not scarce and has zero opportunity cost
Free rider
Someone who doesn’t pay to use public a good
Merit good
A good that is thought to be desirable by consumers, but which is underprovided by market due to information failure
Information failure
A situation where consumers don’t get a full information when making decisions
Demand
Quantity of a product that the consumer is willing and able to buy at different prices per period
Supply
Quantity of product that the producers are willing and able to sell per period
AD
Total demand for economy’s good at given price level at given time
AS
The total output(real GDP) that producers in an economy are willing and able to supply at a given time period
