Definitions

Question 1

Define the Term ‘Fine’

Answer 1

A Financial Penalty imposed on a firm or consumer

Question 2

Define the Term ‘Monopoly’

Answer 2

When there is one producer/seller dominating the market share

Question 3

Define the Term ‘Economies of Scale’

Answer 3

The decrease in average cost as total output increases

Question 4

Define the Term ‘Absolute Poverty’

Answer 4

Where people do not have enough resources to meet all basic human needs

Question 5

Define the Term ‘Balance of Payments’

Answer 5

Record of all transactions relating to international trade

Question 6

Define the Term ‘Barriers of Entry’

Answer 6

Obstacles that might discourage a firm from entering a market

Question 7

Define the Term ‘Boom’

Answer 7

Peak of economic cycle where GDP is growing at its fastest.

Question 8

Define the Term ‘Competition’

Answer 8

Rivalry that exists between firms when trying to sell goods to the same group of customers

Question 9

Define the Term ‘ Current Account’

Answer 9

Where all exports and imports are recorded

Question 10

Define the Term ‘Cyclical Unemployment’

Answer 10

Unemployment due to falling demand as a result of a downturn

Question 11

Define the Term ‘Deflation’

Answer 11

Period where the average price level/aggregate demand level is falling

Question 12

Define the Term ‘Derived Demand’

Answer 12

Demand that arises because there is demand for another good

Question 13

Define the Term ‘Disposable Income’

Answer 13

Income that is available to someone over a period of time to spend

Question 14

Define the Term ‘Downturn’

Answer 14

Period in economic cycle where GDP grows, but more slowly

Question 15

Define the Term ‘Dumping’

Answer 15

Where an overseas firm sells large quantities of a produce below cost in the domestic market

Question 16

Define the Term ‘Direct Taxes’

Answer 16

Taxes levied on the income earned by firms and individuals

Question 17

Define the Term ‘External Benefits’

Answer 17

Positive spillover effects on consumption or production that bring benefits to third parties

Question 18

Define the Term ‘External Costs’

Answer 18

Negative spillover effects on consumption or production that effect third parties in a negative way

Question 19

Define the Term ‘External Economies of Scale’

Answer 19

Cost benefits that all firms in an industry can enjoy when the industry expands

Question 20

Define the Term ‘Factors of Production’

Answer 20

Resources are used to produce goods and services.

Question 21

Define the Term ‘Fixed Costs’

Answer 21

Costs that do not vary with the level of output

Question 22

Define the Term ‘Free Trade’

Answer 22

The situation in which goods coming into or going out the country are not controlled or taxed

Question 23

Define the Term ‘Frictional Unemployment’

Answer 23

When workers are unemployed for a short period of time as they move from one job to another

Question 24

Define the Term ‘Globalisation’

Answer 24

Growing interconnection and interdependence between the world’s economies

Question 25

Define the Term ‘Gross Domestic Product’

Answer 25

The market value of all final goods and services produced in a period of time.

Question 26

Define the Term ‘Indirect Taxes’

Answer 26

Taxes levied on spending

Question 27

Define the Term ‘Infant Industries’

Answer 27

New industries yet to establish themselves

Question 28

Define the Term ‘Inferior Goods’

Answer 28

Goods for which demand will fall if income rises or rise if income falls

Question 29

Define the Term ‘Interest Rates’

Answer 29

The cost of borrowing upon lenders usually expressed as a percentage of the total amount owed

Question 30

Define the Term ‘Market Failure’

Answer 30

Where markets lead to inefficiency

Question 31

Define the Term ‘Niche Market’

Answer 31

The market for a special product or service that does not have many buyers

Question 32

Define the Term ‘Menu Costs’

Answer 32

Costs to firms of having to make repeated price changes

Question 33

Define the Term ‘Multinational Coporation (MNC)’

Answer 33

Companies that produce in many different countries

Question 34

Define the Term ‘Normal Goods’

Answer 34

Goods for which demand will increase if income increases or fall if income falls

Question 35

Define the Term ‘Oligopoly’

Answer 35

Market dominated by a few large firms

Question 36

Define the Term ‘Opportunity Cost’

Answer 36

Cost of the next best alternative given up when making a choice

Question 37

Define the Term ‘Private Sector’

Answer 37

Provision of goods and services by businesses that are owned by individuals or groups of individuals

Question 38

Define the Term ‘Privatisation’

Answer 38

Act of selling a company or activity controlled by the government to private investors

Question 39

Define the Term ‘Productivity’

Answer 39

Rate at which goods are produced, and the amount produced in relation to the work, time and money needed to produce them

Question 40

Define the Term ‘Progressive Tax’

Answer 40

When a proportion of income paid in tax rises as the income of the taxpayer rises

Question 41

Define the Term ‘Protectionism’

Answer 41

Approaches used by governments to protect domestic producers

Question 42

Define the Term ‘Quota’

Answer 42

Physical limit on the quantity of imports allowed into a country

Question 43

Define the Term ‘Relative Poverty’

Answer 43

Poverty that is defined relative to existing standards of living for the average individual

Question 44

Define the Term ‘Shoe Leather Costs’

Answer 44

Costs to firms and consumers for searching for new suppliers when inflation is high

Question 45

Define the Term ‘Structural Unemployment’

Answer 45

Unemployment caused by changes in the structure of the economy such as the decline in an industry

Question 46

Define the Term ‘Subsidy’

Answer 46

Money that is paid by the government or organization to make prices lower, reduce the cost of producing goods.

Question 47

Define the Term ‘Supply Side Policy’

Answer 47

Government measures designed to increases aggregate supply in the economy

Question 48

Define the Term ‘Tariffs’

Answer 48

Tax on imports to make them more expensive

Question 49

Define the Term ‘Total Cost’

Answer 49

Fixed + Variable costs

Question 50

Define the Term ‘Trade Barriers’

Answer 50

Measures designed to restrict imports

Question 51

Define the Term ‘Trading Bloc’

Answer 51

Group of countries situated in the same region that join together to enjoy free trade and reduce trade barriers

Question 52

Define the Term ‘Unemployment’

Answer 52

Those actively seeking work are unable to find a job

Question 53

Define the Term ‘Variable Costs’

Answer 53

Costs that change when output levels change

Question 54

What is the ‘World Trade Organization’

Answer 54

International organization that promotes free trade by persuading countries to abolish trade barriers; it policies free trade agreements, settles trade disputes between governments and organises trade negotiations

Question 55

Define the Term ‘Price Elasticity of Demand’

Answer 55

Measures the responsiveness of a % change in quantity demanded to a % change in price

Question 56

Define the Term ‘Price Elasticity of Supply’

Answer 56

Measures the responsiveness of a % change in quantity supplied to a % change in price

Question 57

What is the ‘Basic Economic Problem’

Answer 57

Allocation of a nation’s scare resources between competing uses that represent infinite wants

Question 58

Define the Term ‘Invisible Trade’

Answer 58

Trade in services

Question 59

Define the Term ‘Visible Trade’

Answer 59

Trade in goods

Question 60

Define the Term ‘Equilibrium Price’

Answer 60

Price at which supply and demand are equal