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micro economic definitions > definitions > Flashcards

definitions Flashcards

1
Q

What is the definition for Basic economic problem?

A

Deciding how to satisfy infinite wants from finite resources

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2
Q

What is the definition for economic good?

A

Have some elements of scarcity + value, so people are willing to pay for them

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3
Q

What is the definition for free good?

A

Have no opportunity costs - they are not scarce

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4
Q

What is the definition for needs?

A

Goods and services that are required

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5
Q

What is the definition for wants?

A

Goods and services that are not necessary but are desired

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6
Q

What is the definition for factors of production?

A

The resources required in order to produce goods

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7
Q

What is the definition for normative statements?

A

Subjective statements that carry value. Statements of opinion

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8
Q

What is the definition for positive statements?

A

Objective statements that can be tested, amended + rejected by referring to available evidence

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9
Q

What is the definition for free market economy?

A

The market decides how to allocate resources

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10
Q

What is the definition for mixed economy?

A

Let individuals decide how much they want to make and market forces will dictate the right number

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11
Q

What is the definition for opportunity cost?

A

The next best alternative foregone

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12
Q

What is the definition for infrastructure?

A

Man made resources

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13
Q

What is the definition for exchange?

A

The process by which goods and services are exchanged

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14
Q

What is the definition for specialisation?

A

The concentration by a worker, firm or region on a narrow range of products

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15
Q

What is the definition for production possibility frontier?

A

A PPF is an illustration of the trade offs facing an economy that only produces 2 goods

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16
Q

What is the definition for Ceteris Paribus?

A

Everything else remains equal

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17
Q

What is the definition for privatisation?

A

The process of going from the public sector to the private sector

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18
Q

What is the definition for market?

A

A market exists when buyers contact sellers or vice versa with the aim of exchanging goods and services

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19
Q

What is the definition for demand?

A

When the buyer has the desire, the ability and the willingness to buy a product at a particular price

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20
Q

What is the definition for supply?

A

When the sellers are willing and able to sell a product at a particular price

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21
Q

What is the definition for effective demand?

A

Quantity of a good or service that consumers are actually buying at the current market price

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22
Q

What is the definition for consumer surplus?

A

The extra amount a consumer is willing and able to pay for a product above the price they actually do pay

23
Q

What is the definition for production?

A

Process of turning input of scarce resources into an output of goods or services

24
Q

What is the definition for supply schedule?

A

A supply schedule shows the relationship between price and planned supply over a hypothetical range of prices

25
Q

What is the definition for subsidy?

A

Government pays you

26
Q

What is the definition for producer surplus?

A

measured as the difference between the price the producers are willing and able to supply a good for + the price they actually receive

27
Q

What is the definition for price discrimination?

A

Where the same product is sold at different prices to different market segments

28
Q

What is the definition for income elasticity of demand?

A

measures the responsiveness of demand for products to changes in the levels of real disposable income in an economy

29
Q

What is the definition for price elasticity of demand?

A

measures the responsiveness of demand for a product at changes in price

30
Q

What is the definition for cross elasticity of demand?

A

measures the responsiveness of demand for one product to changes in the price of another

31
Q

What is the definition for price elasticity of supply?

A

measures the responsiveness of quantity supplied of a product to changes in the price of that product

32
Q

What is the definition for market failure?

A

Where resources are inefficiently allocated due to imperfections in the working of market mechanisms

33
Q

What is the definition for externalities?

A

A spill over effect. It is an external cost or benefit of producing a good or service

An effect where third parties are affected by the production or consumption of a good

34
Q

What is the definition for negative externalities?

A

Cost incurred by third parties (external cost) as a result of an economic transaction

35
Q

What is the definition for merit goods?

A

Goods and services that the government feels that people will under-consume

36
Q

What is the definition for direct tax?

A

Paid directly by the tax payer to the government e.g income tax. Size of tax depends on the individual.

37
Q

What is the definition for indirect tax?

A

Tax on a goods or services that a consumer pays at the point of sale

38
Q

What is the definition for sustainability?

A

Making sure there is enough resources to provide for future generation

39
Q

What is the definition for demerit goods?

A

A demerit good is a good that the government feel could be over consumed if left to the free market.

Goods that have less benefits to the consumer than they expect

40
Q

How to work out average costs?

A

Total costs divided by output

41
Q

What is the definition for a private good?

A

A private good is where someone consumes the good + then no one else can consume that particular good e.g food

42
Q

What is the definition for a public good?

A

A public good is a product that one individual can consume without reducing its availability to another individual and from which no one is excluded

43
Q

What is the definition of free rider?

A

Someone who receives the benefit but allows others to pay for it

44
Q

What is the definition of non market based solutions?

A

uses laws, regulations & standards to overrule market behaviour

45
Q

What is the definition of market based solutions?

A

directly affects the market and the determinants - supply and demand

46
Q

What is the definition of regulations?

A

Principles or rules used to control, direct or manage an activity

47
Q

What is the definition of government failure?

A

A situation where the government intervenes in the economy to correct a market failure creating inefficiency & leads to a misallocation of scarce resources

48
Q

What is the definition for pollution permits?

A

involves giving firms permission to pollute a certain amount. If firms produce less it can sell its pollution permits to another firm

49
Q

What is the definition for buffer stock systems?

A

a government plan to stabilise prices in volatile markets. This requires intervention buying and selling. Prices for agricultural products are often volatile because Supply can vary due to the weather. Demand is inelastic.

50
Q

What is the definition for productive efficiency?

A

This occurs when a maximum number of goods are produced with a given amount of inputs. This will occur on the PPF

51
Q

What is the definition for allocative efficiency?

A

This occurs when goods and services are distributed according to customer preferences

52
Q

What is the definition for economies of scale?

A

occurs when a firms long run average costs fall with increasing output

53
Q

What is the definition for diseconomies of scale?

A

occurs when long run average costs start to rise with increased output

micro economic definitions (1 decks)

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