Economic Definitions

Question 1

Scarcity

Answer 1

Limited in supply

Question 2

Limited Means

Answer 2

e.g Time = Only 24 hours, Income = Limited money flowing into household, Skills = Can either do it or not

Question 3

Choice

Answer 3

Selecting between alternatives

Question 4

Consumer

Answer 4

Individual who uses goods + services

Question 5

Household

Answer 5

A person or group living under one roof

Question 6

Opportunity Cost

Answer 6

The next best alternative foregone when a choice is made (foregone means given up)

Question 7

Wants

Answer 7

Something that is desired or wished for

Question 8

Needs

Answer 8

Something that is required for living

Question 9

Conflict

Answer 9

Occurs when people have opposing values

Question 10

Compromise

Answer 10

A decision made that satisfies both parties values

Question 11

Values

Answer 11

Those fundamental beliefs and principles that determine the decisions we make

Question 12

Consumer Demand

Answer 12

The quantity of a good or service an individual is willing and able to purchase at a range of prices

Question 13

A Demand Schedule

Answer 13

A table setting out the price and quantity demanded

Question 14

The Law Of Demand

Answer 14

As price increases, quantity demand decreases. Ceteris Paribus and vice versa

Question 15

Ceteris Paribus

Answer 15

All other things being equal. All other factors remain unchanged, only the price changes

Question 16

SPIT

Answer 16

S = Shift in the graph
P = Price of related goods + services
I = Income (If income increases there will be a decrease in demand and vice versa)
T = Tastes & Fashions (If good/service is fashionable there will be a increase in demand and vice versa)

Question 17

Complementary Goods

Answer 17

Goods usually consumed together (pen and paper, shoes and socks, milk and cereal etc)

Question 18

Substitute Goods

Answer 18

Goods which can be used in place of each other (pen or pencil, KFC or BK, iPhone or Samsung, tea or coffee etc)

Question 19

Necessities

Answer 19

Goods essential for living

Question 20

Inferior Goods

Answer 20

low quality goods and services that we demand less of as our income increases

Question 21

Normal Goods

Answer 21

Good quality good and services we demand more of as our income increases

Question 22

Luxury Goods

Answer 22

High quality goods and services we demand more of as our income increases significantly

Question 23

Disposable Income

Answer 23

Income left over once tax payments and other deductions have been made