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Theme 1 all economic definitions > every definition in AS economics > Flashcards

every definition in AS economics Flashcards

1
Q

Define AD Valorem tax?

A

An indirect tax imposed on a good where the value of the tax is
dependent on the value of the good.

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2
Q

Define Asymmetric information?

A

Where one party has more information than the other, leading to market failure.

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3
Q

Define Capital?

A

One of the four factors of production; goods that can be used in the production process.

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4
Q

Define capital goods?

A

Goods are produced in order to aid the production of consumer goods in the future.

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5
Q

Define ceteris paribus?

A

All other things remaining the same.

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6
Q

Define Command Economy?

A

All factors of production are allocated by the state, so they decide
what, how and for whom to produce goods

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7
Q

Define complementary goods?

A

If good B becomes more expensive, demand for good A.

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8
Q

Define consumer surplus?

A

The difference between the price the consumer is willing to pay and
the price they actually pay

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9
Q

Define cross elasticity of demand?

A

The responsiveness of demand for one good (A) to a change in
price of another good (B)
%change in QD of A
%change in P of B

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10
Q

Define Demand?

A

The quantity of a good/service that consumers are able and willing
to buy at a given price at a given moment of time

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11
Q

Define Diminishing marginal utility?

A

The extra benefit gained from consumption of a good generally
declines as extra units are consumed; explains why the demand
curve is downward sloping

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12
Q

Define Division of labor?

A

When labor becomes specialized during the production process

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13
Q

Define Economic problem?

A

The problem of scarcity; wants are unlimited but resources are finite so choices have to be made.

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14
Q

Define efficiency?

A

When resources are allocated optimally; so every consumer benefits and waste is minimized.

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15
Q

Define enterprise?

A

One of the 4 factors of production; the willingness and ability to take risks and combine the 3 factors of cell.

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16
Q

Define equilibrium price/quantity?

A

Where demand equals supply meaning there are no more market forces.

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17
Q

Define Excess demand?

A

When price is set too low so demand is greater than supply.

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18
Q

Define excess supply?

A

When price is set too high so supply is greater than demand.

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19
Q

Define externalities?

A

The cost or benefit a third party receives from an economic transaction outside of the market mechanism.

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20
Q

Define external cost/benefit?

A

he cost/benefit to a third party not involved in the economic
activity; the difference between social cost and private
cost

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21
Q

Define free market?

A

An economy where the market mechanism allocates resources so
consumers and producers make decisions about what is produced,
how to produce and for whom

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22
Q

Define the free-rider principle?

A

People who do not pay for a public good still receive benefits from it
so the private sector will under-provide the good as they cannot
make a profit

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23
Q

Define government failure?

A

When government intervention leads to a net welfare loss in society

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24
Q

Define habitual behaviour?

A

A cause of irrational behaviour; when consumers are in the habit of
making certain decisions

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25
Define incidence of tax?
The tax burden on the taxpayer
26
Define YED?
The responsiveness of demand to a change in income %change in QD %change in Y
27
Define indirect tax?
Taxes on expenditure which increase production costs and lead to a fall in supply
28
Define inferior good?
YED<0; goods which see a fall in demand as income increases
29
Define information gap?
When an economic agent lacks the information needed to make a rational, informed decision
30
Define information provision?
When the government intervenes to provide information to correct market failure
31
Define labor?
One of the four factors of production; human capital
32
Define land?
One of the four factors of production; natural resources.
33
Define luxury goods?
YED>1; an increase in incomes causes an even bigger increase in demand
34
Define market failure?
When the free market fails to allocate resources to the best interest of society, so there is an inefficient allocation of scarce resources
35
Define Market forces?
Forces in free markets which act to reduce prices when there is excess supply and increase them when there is excess demand
36
Define maximum price?
price which a firm cannot charge above
37
Define minimum price?
price which a firm cannot charge below
38
Define mixed economy?
Both the free market mechanism and the government allocate | resources
39
Define Negative externalities of production?
Where the social costs of producing a good are greater than the private costs of producing the good.
40
Define non-renewable resources?
Resources which cannot be replaced at a level of equal consumption; the stock of level decreases over time as they are consumed.
41
Define non-rivalry?
One person's use of the good does not prevent someone else from using it.
42
Define normal goods?
Demand will increase as income increases.
43
Define normative statement?
This is defined as a subjective statement that is based on judgements and opinions which cannot be scientifically proven or disproven.
44
Define OC?
The value of the next best alternative foregone.
45
Define perfectly price elastic good?
This is when quantity demanded or supplied falls to 0 when price changes. -infinity
46
Define perfectly price inelastic good?
This is when quantity demanded or supplied does not change when price changes.
47
Define a positive statement?
Objective statements which can be tested with factual evidence that can be scientifically proven or disproven.
48
Define positive externalities of consumption?
Where social benefits of consuming a good are larger than the private benefits of consuming that good.
49
Define PPF?
The maximum productive potential of an economy where resources are fully and efficiently employed.
50
Define price elasticity of demand?
The responsiveness of demand to a change in price so %change in QD/% change in price.
51
Define price elasticity of supply?
The responsiveness of supply to a change in price %change in QD/% change in price.
52
Define price mechanism?
The system where resource allocation based on free market movement of prices is determined by the demand and supply curves.
53
Define private cost/benefit?
The cost/benefit to the individual participating in the economic activity.
54
Define private goods?
Goods that are rivalry and excludable.
55
Define producer surplus?
The difference between the price the producer is willing to charge and the price they actually charge.
56
Define public goods?
Goods that are non-excludable and non-rivalry
57
Define rationality?
Decision-making that leads to economic agents maximising their utulity.
58
Define regulation?
Laws to address market failure and promote competition between firms
59
Define relatively price elastic good?
Where demand/supply is responsive to a change in price. This means a small change in price leads to a large change in quantity demanded/supplied.
60
Define relatively price inelastic good?
Where demand/supply is not responsive to a change in price. This means a large change in price will lead to a large price change in quantity demanded/supplied.
61
Define renewable resources?
Resources that can be replenished so the stock of resources can be mantained over a period of time.
62
Define scarcity?
The shortage of resources in comparison to the quantity of human wants.
63
Define social cost/benefit?
The cost/benefit to society due to economic activity.
64
Define social optimum position?
Where social costs equals to social benefits. The amount that should be produced/consumed to maximise social welfare.
65
Define social science?
The study of societies and human behaviour.
66
Define specialization?
The production of a limited range of goods bu a firm/country so they aren't self sufficent to trade with others.
67
Define specific tax?
A tax imposed on a good where the value of tax is dependent on the quantity brought.
68
State subsidy?
Money granted by the government to firms in order to encourage them to produce more.
69
Define substitutes?
If good B becomes more expensive, demand for good A rises also.
70
Define supply?
The ability and willingness to provide a particular good/service at a given price at a given moment in time
71
Define symmetric information?
Where buyers and sellers both have access to the same info.
72
Define trade pollution permits?
Linces that allow business to pollute up to a certain amount. The government controls the amount of pollution.
73
Define utulity?
The satisfaction dervied from consuming a good

Theme 1 all economic definitions (1 decks)

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