Economics Key Terms - Page 16 Flashcards
Choice
A decision between one or more alternatives
Scarcity
Resources are limited in supply, e.g. raw materials and time
Trade-off
Where the selection of one choice results in the loss of another
Opportunity cost
The loss of the next most desired alternative when choosing a particular course of action
Demand
The quantity of a good or service a consumer would like to buy at a given price in a time period
Price insensitivity
Where changing the price of a product by a certain amount leads to a smaller change in demand
Necessity
A good or service that a consumer views as vital
Substitute
A good or service which is a possible alternative to another good or service
Price sensitivity
Where changing the price of a good or service by a certain amount results in a loss of revenue
Stakeholders
Groups which are interested in the performance of a business
Shareholders
The owners of a limited company. They buy shares which represent part ownership of a company
Competition commission
The body which investigates cases where firms merge or are taken over to decide whether such activity is in the public interest. It has the power to prevent mergers or take-overs where these are seen to reduce the level of competition
Dividends
The payments made to shareholders from profits of a company
Third party
A group or an individual that is not directly involved in a decision
Externalities
The effects of an economic decision or individuals and groups outside who are not directly involved in the decision
Negative externalities
Those costs arising from business activity which are paid for by people or organisations outside the firm
Positive externalities
Those benefits arising from business activity which are experienced by people or organisations outside the firm. The firm receives no payment for the benefits received
Profits
The rewards of risk-taking. Profit is the difference between the amount of revenue earned by a fireman the total costs of producing the goods and services the business sells
Market share
The quantity sold by a business as a percentage of total sales in a market
Competitiiveness
The strength of a business’s position in a market measured by market share and profitability. It reflects whether people are prepared to use the business over its rivals
