DEFINITIONS Flashcards
NOMINAL VALUES
Values not affected by inflation
NORMATIVE STATEMENT
A statement that can’t be supported because it’s a value judgment
OPPORTUNITY COST
The value missed from the next best alternative
POSITIVE STATEMENT
A statement which can be supported by evidence
PRIMARY SECTOR
Extractive and agricultural industries eg. Farming
PRIVATE SECTOR
The part of the economy owned by individuals, companies etc.
PRODUCTION POSSIBILITY FRONTIER (PPF)
A curve which shows the max level of output of one good compared to all other goods in the economy
PRODUCTIVITY
Output from each unit of input
PUBLIC SECTOR
The part of the economy controlled by the state of the government
REAL VALUES
Values adjusted for inflation
SCARCE RESOURCES
Resources that are limited in supply
SECONDARY SECTOR
Industries involved in the production of goods
TERTIARY SECTOR
Industries involved in the production of services
WORKING CAPITAL
Resources that are in the production system waiting to be transported into goods
COMPLEMENTARY GOOD
A good which is bought with other goods to satisfy a want eg. A phone case when you buy a phone
INFERIOR GOOD
A good where demand falls when income increases eg. Public transport
MACROECONOMICS
The study of the economy as a whole eg. Inflation, growth unemployment etc.
MICROECONOMICS
The study of behaviour of individuals or groups such as consumers, firms, workers etc
NORMAL GOOD
A good where demand increases when income also increases
PRICE ELASTICITY OF DEMAND
The responsiveness of demand to a chance in price
PRICE ELASTICITY OF SUPPLY
A measure of the responsiveness of quantity supplied to a change in price
SUBSIDY
A grant given by the government to encourage production or consumption of a good
SUBSTITUTE
A good that can be replaced by another good to satisfy a want
ASYMMETRIC INFO
Where buyers and sellers have different levels of info, typically one has more than another
