Definitions to words Flashcards
Lowest average cost level of output/production
Productive efficiency
Payments by the government which reduce the costs of production of goods or services
Subsidy
Measure of the % change in the quantity demanded of one good resulting from a % change in price of another good
Cross elasticity of demand
The cost borne by the party involved in the activity due to the consumption of one extra unit
Marginal private cost
Economic resource used to produce goods and services
Factor of production
Factors of production for which demand exceeds supply
Scarce resources
Demand for a good that has multiple uses
Composite demand
Cost received by a third party
External cost
Responsiveness of supply following a change in price
Price elasticity of supply
Process which markets solve the problem allocating scarce resources between competing uses
Market mechanism
A good (such as healthcare) which social benefits of consumption exceed private benefits
Merit good
Quantity of good or service that consumers are willing to buy at a given price in a given time frame
Demand
Quantity of good or service that firms plan to sell at a given price in a given amount of time
Supply
A good that is excludable and non-rival
Private good
Public ‘good’ or ‘bad’ dumped on a third party outside the market
Externality
