Economics Flashcards
What is an equilibrium?
When the economic forces are balanced
What is least likely to lead to a shift to the right on the supply curve?
Increase in the cost of resources
What is irrationality?
When people make choices that go against the assumption
What indicates that two goods are complementary?
A negative cross elasticity of demand
What is a negative cross elasticity of demand?
An indicator that the demand for good A will decrease as the price of good B goes up
Opportunity cost?
Represents the potential benefits of choosing one alternative over another
Inflation?
An increase in prices of goods
Positive externality?
The positive effect an activity imposes - a production or consumption activity that creates an external benefit
Functions of the Bank of England:
- issuing bank notes to England and Wales
- providing safe custody for gold reserve
- making sure the financial system is safe
- moving bank rate up and down
Consumer surplus?
The difference between the price and consumer pays for a product and the price a consumer would be willing to pay
Division of labour?
The separation of a work process into a number of tasks
Specialisation?
When a company focuses their labour on a specific type of production -focusing on a specific job
PPF (production possibility frontier)
Illustrates the varying amounts of two products when they depend on the same resources
Economic growth?
An increase in the amount of goods produced
Price elasticity of demand
%change of quantity demanded
—————————————————
%change in price
