definitions(micro) Flashcards
define demand
the quantity of a goood or services purchased at a given price over a given time period
define supply
the quanitity of a good or service that firms are willing to sell at a given price over a given time period
define normative staments
statements that express an opinion about what ought to be, subjective statments that carry value judgments
define positive statments
objective statments that can be tested or rejected by reffering to the available evidence
define value judgments
a view of the rightnessor wrongness of something, based on a personal view
define barter
the practice of exchanging one good or service for another without using money
define capital goods
help to aid production of consumer goods in the future
define constraints
limits to what consumers can afford
Define entrepreneur
an individual who seeks to supply products to a market for a rate of return
define factors of production
the resources used to produce goods and services
land, labour, capital, enterprise
define the factors of production
- land: natural resources availiable for production
- labour: human input into production process
- capital: goods used in the uspply of other goods
- enterprise: the willingness of people in business to take risks
define opprtunity cost
the cost of any choice in terms of the next best forgone alternative
define production possibility frontier
shows the maxiumum potential output of a combination of two goods and services an economy can achieve when all of it’s resources are fully and efficently employed, given the current level of technology
define consumer goods
goods used to satisfy consumer wants and needs
define specialisation
when an individual, firm, region or country concentrates on the production of a limited range of goods and services
deine division of labour
the specialisation of workers on specific tasks in the production process
Define medium of exchange
something which i s commonly accepted in exchange for goods and services
1 of the functions of money
define measure of value
the price of a good revealing it’s value
define store of value
value is maintained and can be kept for a long time
define method of deffered payment
allows debt to be created
Define price mechansism
the system of resouce allocation through the market
define command economy
an economy in which resoucres are allocated solely by the state
define a mixed economy
an economy in which resoucres are alloctaed by the publi and private sector
define a free market economy
an economy in which resources are alloctaed soley by the price mechansim
define the public sector
the part of an economy which is controlled or owned by the goverment
define the private sector
the part of economy owned or controlled by individuals or groups of individuals who seek to maximise profit or raise awarness
define efficency
the optimal production and distribution of scarce resources
define ceteris paribus
a principle where the relationship between two variables is isolated, assuming that all other factors are held constant
define the economic problem
the problem of scarcity; wants and needs are unlimted but resources are finite so choices must be made
define renewable resources
resources which can be replenished; so the stock of resources can be maintained over a period of time
define non renewable resources
resources which cannot be readily replenished or replaced at a level equal to consumption; the stock level decreases over time as they are consumed
define maximum productive potential
the amount of output an economy could produce if all of its resources were fully and efficently employed
define economic growth
an increase in the productive potential of a country - shown by an outward shift of the PPF
define utility
a meaure of satisfaction that consumers recieve from purhasing and consuming a good/ service
Define subsidies
Money given by the government to encourage production, which is not paid back
ad valorem tax
an indirect tax imposed on a good where the valueof the tax is dependant on the value of the good
equilibrium price/quantity
demand equals supply so there are no more market forces bringin about chnage to price or quantity demanded
excess demand
when the price is set too low so demand is greater than supply
excess supply
when price is set too high so supply is greater than demand
indircet tax
taxes on expenditure whih increases production costs and lead to a fall in supply
specific tax
a tax imposed on a good or sevice where the value of tax is dependant on the quantity bought
parallel line
define consumer surplus
the difference between what consumers are willing to pay and what they actually pay.
define producer surplus
the extra amount of money paid to producers above what they are willing to accept to supply a good /service
