Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

Micro Year 1 > Definitions > Flashcards

Definitions Flashcards

1
Q

The economic problem

A

We have infinitive wants but scarce resources

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

Opportunity cost

A

The benefits of the next best alternative forgone

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

Division of labour

A

When firms split up production into smaller tasks and assigns workers to each of these tasks

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

Specialisation

A

When a worker, a firm or an economy concentrated on producing a limited range of goods/services

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

Production Possibility Frontier (PPF)

A

Shows all possible combinations of two goods we can produce when using all resources efficiently

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

Supply

A

The quantity at which a firm is willing and able to sell a good at a given price

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

Demand

A

The quantity at which a consumer is willing and able to buy a good at a given price

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

Complementary good

A

Two goods that are brought together- in joint demand

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

Substitute good

A

Alternative for another good- competitive demand

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

Supply shift factors

A 
Productivity
Indirect tax
New entrants
Technology
Subsidy
Weather
Cost of production
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

Demand shift factors

A 
Population
Advertising
City speculators
Income
Fashion
Interest rates
Complements
Substitutes
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

Why demand curve downward sloping

A

Diminishing marginal utility
Substitution effect
Income effect

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

Why supply curve upward sloping

A

Profit incentive
Production cost
New entrants

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

Functions of price mechanism (3)

A

Signals
Incentives
Rations

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

Economic agents

A 
Consumers
Firms
Government
Owners
Labour
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

Price mechanism

A

The means by which supply and demand determine the allocation of scarce resources

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

Marginal Utility

A

The additional satisfaction a consumer recieves from each additional unit of a good or service consumed

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

Rational decision

A

When consumers compare costs and benefits and makes a decision based on which option maximises their utility

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

Advantages of division of labour

A

Increases quality
Increases quantity
Unit cost decreases
Training cost reduces

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

Disadvantages of division of labour

A

demotivates workers
If someone leaves, whole production line breaks down
Difficult for workers to find new jobs

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

Problem with bartering

A

Finding someone who wants your good and you want their good

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

Uses of money

A

Medium exchange
Unit of account
Store of value
Deferred payment

23
Q

How choices are manipulated

A

Habitual behaviour
Social norms
Rule of thumb
Lack of self control

24
Q

Behavioural economics

A

Models how consumers really make decisions by carrying out experiments

25
Q

Behavioural economics influences

A

Firms pricing

Government policy

26
Q

PED

A

Measures the responsiveness of Qd given a change in price

27
Q

YED

A

Measures responsiveness of Qd given a change in income

28
Q

PES

A

Measures responsiveness of Qs given a change in price

29
Q

XED

A

Measures the responsiveness of Qd of one good given a change in price of another good

30
Q

Factors effecting PED

A 
Substitutes 
Proportion of income
Luxury/necessity
Addiction/habit
Time period
31
Q

Factors effecting PES

A 
Barriers to entry
Inventory levels
Time lag
Ease of substitution of FoPs
Raw material availability 
Spare capacity
32
Q

Consumer surplus

A

Difference between what consumers are willing to pay and what they actually pay

33
Q

Producer surplus

A

Difference between what producers are willing to sell for and what they actually sell for

34
Q

Specific tax

A

A fixed amount of tax paid on each unit sold

35
Q

Ad Valorem Tax

A

A tax as a % of the price of a good

36
Q

Market in equilibrium

A

No excess demand or supply

37
Q

Allocative efficiency

A

Resources are allocated at a price which is optimal for society

38
Q

Market failure

A

When the price mechanism leads to a misallocation of resources and leads to a price or quantity that is not best for society

39
Q

Reasons for market failure (4)

A

Negative externalities
Positive externalities
Public good
Information failure

40
Q

Negative externalities (external cost)

A

Costs which effect 3rd parties outside price mechanism

41
Q

Positive externalities (external benefits)

A

Benefits which effect 3rd parties outside the price mechanism

42
Q

Government intervention

A

When governments enter the market to try and fix market failure

43
Q

Government failure

A

When governments enter the market to fix market failure but only leads to a further misallocation of resources

44
Q

Purpose of indirect tax

A

Makes production more costly for producers

45
Q

Minimum pricing

A

The lowest price suppliers can sell a good for

46
Q

Regulation

A

A rule or law that puts a limit or a complete ban on the production or consumption of a product

47
Q

Subsidy

A

Decreases cost of production so firms can supply more

48
Q

Max pricing

A

The highest possible price firms can sell a good for - helps low income consumers

49
Q

Public goods

A

Non excludable (can’t exclude someone else consuming your good) and non rivalrous (your consumption doesn’t reduce the amount available to others)

50
Q

Problem with public good

A

Free rider problem

51
Q

Information gaps

A

When consumers/producers lack information needed to make an informed decision

52
Q

Indirect tax

A

A tax on goods and services

53
Q

Advantages of specialisation (in an economy)

A

More variety
More output
More trade

54
Q

Disadvantages of specialisation (in an economy)

A

Overspecialisation
Depleting natural resources
Vulnerable to halt in production

Micro Year 1 (2 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions