Definitions Flashcards
Define the Term ‘Fine’
A Financial Penalty imposed on a firm or consumer
Define the Term ‘Monopoly’
When there is one producer/seller dominating the market share
Define the Term ‘Economies of Scale’
The decrease in average cost as total output increases
Define the Term ‘Absolute Poverty’
Where people do not have enough resources to meet all basic human needs
Define the Term ‘Balance of Payments’
Record of all transactions relating to international trade
Define the Term ‘Barriers of Entry’
Obstacles that might discourage a firm from entering a market
Define the Term ‘Boom’
Peak of economic cycle where GDP is growing at its fastest.
Define the Term ‘Competition’
Rivalry that exists between firms when trying to sell goods to the same group of customers
Define the Term ‘ Current Account’
Where all exports and imports are recorded
Define the Term ‘Cyclical Unemployment’
Unemployment due to falling demand as a result of a downturn
Define the Term ‘Deflation’
Period where the average price level/aggregate demand level is falling
Define the Term ‘Derived Demand’
Demand that arises because there is demand for another good
Define the Term ‘Disposable Income’
Income that is available to someone over a period of time to spend
Define the Term ‘Downturn’
Period in economic cycle where GDP grows, but more slowly
Define the Term ‘Dumping’
Where an overseas firm sells large quantities of a produce below cost in the domestic market
Define the Term ‘Direct Taxes’
Taxes levied on the income earned by firms and individuals
Define the Term ‘External Benefits’
Positive spillover effects on consumption or production that bring benefits to third parties
Define the Term ‘External Costs’
Negative spillover effects on consumption or production that effect third parties in a negative way
Define the Term ‘External Economies of Scale’
Cost benefits that all firms in an industry can enjoy when the industry expands
Define the Term ‘Factors of Production’
Resources are used to produce goods and services.
Define the Term ‘Fixed Costs’
Costs that do not vary with the level of output
Define the Term ‘Free Trade’
The situation in which goods coming into or going out the country are not controlled or taxed
Define the Term ‘Frictional Unemployment’
When workers are unemployed for a short period of time as they move from one job to another
Define the Term ‘Globalisation’
Growing interconnection and interdependence between the world’s economies
Define the Term ‘Gross Domestic Product’
The market value of all final goods and services produced in a period of time.
Define the Term ‘Indirect Taxes’
Taxes levied on spending
Define the Term ‘Infant Industries’
New industries yet to establish themselves
Define the Term ‘Inferior Goods’
Goods for which demand will fall if income rises or rise if income falls
Define the Term ‘Interest Rates’
The cost of borrowing upon lenders usually expressed as a percentage of the total amount owed
Define the Term ‘Market Failure’
Where markets lead to inefficiency
Define the Term ‘Niche Market’
The market for a special product or service that does not have many buyers
Define the Term ‘Menu Costs’
Costs to firms of having to make repeated price changes
Define the Term ‘Multinational Coporation (MNC)’
Companies that produce in many different countries
Define the Term ‘Normal Goods’
Goods for which demand will increase if income increases or fall if income falls
Define the Term ‘Oligopoly’
Market dominated by a few large firms
Define the Term ‘Opportunity Cost’
Cost of the next best alternative given up when making a choice
Define the Term ‘Private Sector’
Provision of goods and services by businesses that are owned by individuals or groups of individuals
Define the Term ‘Privatisation’
Act of selling a company or activity controlled by the government to private investors
Define the Term ‘Productivity’
Rate at which goods are produced, and the amount produced in relation to the work, time and money needed to produce them
Define the Term ‘Progressive Tax’
When a proportion of income paid in tax rises as the income of the taxpayer rises
Define the Term ‘Protectionism’
Approaches used by governments to protect domestic producers
Define the Term ‘Quota’
Physical limit on the quantity of imports allowed into a country
Define the Term ‘Relative Poverty’
Poverty that is defined relative to existing standards of living for the average individual
Define the Term ‘Shoe Leather Costs’
Costs to firms and consumers for searching for new suppliers when inflation is high
Define the Term ‘Structural Unemployment’
Unemployment caused by changes in the structure of the economy such as the decline in an industry
Define the Term ‘Subsidy’
Money that is paid by the government or organization to make prices lower, reduce the cost of producing goods.
Define the Term ‘Supply Side Policy’
Government measures designed to increases aggregate supply in the economy
Define the Term ‘Tariffs’
Tax on imports to make them more expensive
Define the Term ‘Total Cost’
Fixed + Variable costs
Define the Term ‘Trade Barriers’
Measures designed to restrict imports
Define the Term ‘Trading Bloc’
Group of countries situated in the same region that join together to enjoy free trade and reduce trade barriers
Define the Term ‘Unemployment’
Those actively seeking work are unable to find a job
Define the Term ‘Variable Costs’
Costs that change when output levels change
What is the ‘World Trade Organization’
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
Define the Term ‘Price Elasticity of Demand’
Measures the responsiveness of a % change in quantity demanded to a % change in price
Define the Term ‘Price Elasticity of Supply’
Measures the responsiveness of a % change in quantity supplied to a % change in price
What is the ‘Basic Economic Problem’
Allocation of a nation’s scare resources between competing uses that represent infinite wants
Define the Term ‘Invisible Trade’
Trade in services
Define the Term ‘Visible Trade’
Trade in goods
Define the Term ‘Equilibrium Price’
Price at which supply and demand are equal
