definitons micro

Question 1

scarcity

Answer 1

a situation in which wants and needs are greater than the resources available

Question 2

opportunity cost

Answer 2

cost expressed in terms of the next best alternative forgone in preference to something else

Question 3

choice

Answer 3

when resources are scarce so individuals firms and governments have to consider

Question 4

fundamental economic problem

Answer 4

limited resources but unlimited wants and needs loading to scarcity forcing a choice, resulting to an opportunity cost

Question 5

factors of production

Answer 5

resources or inputs available in an economy that are used in the production of goods and services

Question 6

labour

Answer 6

human resources available in a country

Question 7

capital

Answer 7

physical resource made by humans that aids the production of goods and services

Question 8

entrepreneur

Answer 8

an individual who seeks out new business opportunities and is willing to take risks

Question 9

physical capital

Answer 9

factors of production such as machinery buildings and infrastructure

Question 10

market economy

Answer 10

most decisions are taken through the market forces of supply and demand through price mechanisms

Question 11

planned economy

Answer 11

resources are state owned and allocated by a central body

Question 12

mixed economy

Answer 12

both market forces of supply and demand and government are involved with resource allocation

Question 13

public sector

Answer 13

part of an economy under government ownership

Question 14

private sector

Answer 14

part of the economy under private ownership

Question 15

privatisation

Answer 15

where there is change in ownership from the public to private sector

Question 16

transition economy

Answer 16

economies changing from centrally planned economy to a market economy

Question 17

normative statement

Answer 17

based on the economist’s opinion of value judgement and can’t be proven

Question 18

positive statement

Answer 18

based on facts or actual evidence

Question 19

short run

Answer 19

time period when a firm can change at last one but not all factor inputs

Question 20

long run

Answer 20

all factors of production are variable but with a constant

Question 21

factor mobility

Answer 21

ease with which a factor can be moved from the production of one good or service to another

Question 22

occupational mobility

Answer 22

edit later

Question 23

geographical mobility

Answer 23

edit later

Question 24

specialisation

Answer 24

process by which individuals, firms, and economies concentrate on producing those goods and services where they have an advantage over others

Question 25

division of labour

Answer 25

where a manufacturing process is split into a sequence of individual tasks

Question 26

public good

Answer 26

a good that is non-excludable and non-rival

Question 27

private goods

Answer 27

goods that are consumed by one person and not availale to anyone else

Question 28

free goods

Answer 28

have zero opportunity costs since consumption is not limited by scarcity

Question 29

demerit goods

Answer 29

a good that is undesirable for consumers and is overprovided by the market because of information failure

Question 30

merit goods

Answer 30

a good that is desirable for consumers but is underprovided by the market because of information failure

Question 31

demand

Answer 31

the willingness and ability of consumers to purchase goods and services at given price levels over a given time period

Question 32

notional demand

Answer 32

buyers may want to buy a product but which is not always baked up by the ability to pay

Question 33

demand schedule

Answer 33

data from which a demand curve is drawn on a graph

Question 34

supply

Answer 34

the willingness and ability of producers to produce goods and service at given prices of given time periods

Question 35

equilibrium

Answer 35

situation where there is no tendency to change in a market

Question 36

disequilibrium

Answer 36

where demand and supply are not equal in a market

Question 37

derived demand

Answer 37

where the demand for a good or service depends on the use that can be made from it

Question 38

rationing

Answer 38

where a producer limits the supply of products in the market to ensure the products remain exclusive

Question 39

signalling

Answer 39

where decisions taken by buyers or sellers are determined by price

Question 40

transmission of preferences

Answer 40

the automatic way in which the market allows the wants of consumers to be made known to the producers

Question 41

provision of incentive

Answer 41

where low or high prices influence consumption and production by encouraging buyers to consume and sellers to produce

Question 42

consumer surplus

Answer 42

difference between the price a consumer is willing to pay for a product and its market price

Question 43

producer surplus

Answer 43

difference between the price a producer is willing to accept and what is actually paid

Question 44

PED

Answer 44

measure of the responsiveness of the quantity demanded for a product following a change uin the price

Question 45

income elasticity of demand (YED)

Answer 45

measures the responsiveness of the quantity demanded for a product following a change in income

Question 46

cross elasticity of demand (XED)

Answer 46

measures the responsiveness of the quantity demanded for one product following a change in the price of another product

Question 47

PES

Answer 47

how responsive the quantity supplied is to a change in the price of the product