DEFINITIONS

Question 1

NOMINAL VALUES

Answer 1

Values not affected by inflation

Question 2

NORMATIVE STATEMENT

Answer 2

A statement that can’t be supported because it’s a value judgment

Question 3

OPPORTUNITY COST

Answer 3

The value missed from the next best alternative

Question 4

POSITIVE STATEMENT

Answer 4

A statement which can be supported by evidence

Question 5

PRIMARY SECTOR

Answer 5

Extractive and agricultural industries eg. Farming

Question 6

PRIVATE SECTOR

Answer 6

The part of the economy owned by individuals, companies etc.

Question 7

PRODUCTION POSSIBILITY FRONTIER (PPF)

Answer 7

A curve which shows the max level of output of one good compared to all other goods in the economy

Question 8

PRODUCTIVITY

Answer 8

Output from each unit of input

Question 9

PUBLIC SECTOR

Answer 9

The part of the economy controlled by the state of the government

Question 10

REAL VALUES

Answer 10

Values adjusted for inflation

Question 11

SCARCE RESOURCES

Answer 11

Resources that are limited in supply

Question 12

SECONDARY SECTOR

Answer 12

Industries involved in the production of goods

Question 13

TERTIARY SECTOR

Answer 13

Industries involved in the production of services

Question 14

WORKING CAPITAL

Answer 14

Resources that are in the production system waiting to be transported into goods

Question 15

COMPLEMENTARY GOOD

Answer 15

A good which is bought with other goods to satisfy a want eg. A phone case when you buy a phone

Question 16

INFERIOR GOOD

Answer 16

A good where demand falls when income increases eg. Public transport

Question 17

MACROECONOMICS

Answer 17

The study of the economy as a whole eg. Inflation, growth unemployment etc.

Question 18

MICROECONOMICS

Answer 18

The study of behaviour of individuals or groups such as consumers, firms, workers etc

Question 19

NORMAL GOOD

Answer 19

A good where demand increases when income also increases

Question 20

PRICE ELASTICITY OF DEMAND

Answer 20

The responsiveness of demand to a chance in price

Question 21

PRICE ELASTICITY OF SUPPLY

Answer 21

A measure of the responsiveness of quantity supplied to a change in price

Question 22

SUBSIDY

Answer 22

A grant given by the government to encourage production or consumption of a good

Question 23

SUBSTITUTE

Answer 23

A good that can be replaced by another good to satisfy a want

Question 24

ASYMMETRIC INFO

Answer 24

Where buyers and sellers have different levels of info, typically one has more than another

Question 25

MARKET FAILURE

Answer 25

When a market fails to supply any of a good which is demanded

Question 26

EXTERNALITY

Answer 26

The difference between the social cost and benefits , the private costs and benefits

Question 27

FREE RIDER

Answer 27

When someone benefits from something which others have paid for.

Question 28

MORAL HAZARD

Answer 28

When a decision is made in their own interest knowing that it will negatively effect others

Question 29

NEGATIVE EXTERNALITIES

Answer 29

Net private cost is greater than net social cost

Question 30

POSITIVE EXTERNALITIES

Answer 30

When the net social cost is greater than the net private cost

Question 31

CETERIS PARIBUS

Answer 31

All things being the same, when one thing changes you assume that everything else hasn’t