Exam Definitions Flashcards
Opportunity cost
The value of the next best alternative that is forgone when a choice is made
Relative scarcity
When our wants and needs are unlimited and the resources needed to fulfil these are limited
The value of the next best alternative that is forgone when a choice is made is known as?
Opportunity cost
A situation where resources are limited compared to demand is known as?
Relative scarcity
Relative prices
The price of one good or service in comparison to another shown in a ratio
The price of one good or service in comparison to another shown in a ratio is known as?
Relative price
The purpose of relative price is?
To display where resources need to be allocated
Consumer sovereignty
Where consumers determine what will be produced through their choices
Where consumers determine what will be produced through their choices is known as?
Consumer sovereignty
Living standards
Aggregate welfare of people in a country made up of material and non material factors
Aggregate welfare of people in a country made up of material and non material factors are known as?
Living standards
Utility
A measure of satisfaction, happiness or wellbeing
A measure of satisfaction, happiness or wellbeing is labeled?
Utility
Ordred preferences
The ordering of alternatives based on their relative utility
The ordering of alternatives based on their relative utility is known as?
Ordred preferences
Present bias
The tendency of people to give stronger weight to payoffs that are closer to the present time when considering trade-offs
The tendency of people to give stronger weight to payoffs that are closer to the present time when considering trade-offs is known as?
Present bias
Framing
How options are presented through advertising
How options are presented through advertising is known as?
Framing
Positive and negative externalities
The positive and negative effect an activity imposes on an unrelated third party
The positive and negative effect an activity imposes on an unrelated third party are known as?
Positive and negative externalities
Nudge
Subtle pushes to influence people into making certain choices without incentives
Subtle pushes to influence people into making certain choices without incentives is known as?
Nudge
Bounded rationality
The idea that in decision-making, rationality of individuals is limited by the information they have
The idea that in decision-making, rationality of individuals is limited by the information they have is known as?
Bounded rationality
Complementary goods
A good that is used with another good
A good that is used with another good is known as a
Complementary good
Veblen good
A good where the demand rises when the price of the good increases
What is an example of a Veblen good?
A exclusive/prestigious house in a neighbourhood
A good where the demand rises when the price of the good increases is known as a
Veblen good
Price mechanism
The way changing market conditions influence the allocation of resources
The way changing market conditions influence the allocation of resources is known as?
Price mechanism
Price
The amount of money expected, required, or given in payment for something
The amount of money expected, required, or given in payment for something is known as?
Price
Market
Anyplace where buyers and sellers interact to exchange goods and services
Anyplace where buyers and sellers interact to exchange goods and services is known as a?
Market
Resource allocation
The process of allocating scarce factors of production among alternative areas of production
The process of allocating scarce factors of production among alternative areas of production is known as?
Resource allocation
Substitute goods
A good or service that serves the same purpose as another good or service
A good or service that serves the same purpose as another good or service are known as?
Substitute goods
Anchoring effect
The common human tendency to rely too heavily on the first piece of information offered
The common human tendency to rely too heavily on the first piece of information offered is known as?
The anchoring effect
Bounded willpower?
The fact that human beings often take actions that they know to be in conflict with their own long-term interests
The fact that human beings often take actions that they know to be in conflict with their own long-term interests is known as?
Bounded willpower
Monopoly
An industry that is dominated by one seller of a product that does not have a close substitute
An industry that is dominated by one seller of a product that does not have a close substitute is known as a?
Monopoly
Monopolistic competition
A type of imperfect competition such that many producers sell products that are differentiated from one another
A type of imperfect competition such that many producers sell products that are differentiated from one another is known as a?
Monopolistic competition
Perfect competition
A market where there are many buyers and sellers, homogenous products, freedom of entry into a market and perfect information
A market where there are many buyers and sellers, homogenous products, freedom of entry into a market and perfect information is known as a?
Perfect competition
Triple bottom line
An accounting framework with three parts which are social, environmental (or ecological) and financial
An accounting framework with three parts which are social, environmental (or ecological) and financial is known as the?
Triple bottom line
Predatory pricing
The illegal act of charging low prices in order to drive a competitor out of the market
The illegal act of charging low prices in order to drive a competitor out of the market is known as
Predatory pricing
Cartel conduct
When two or more firms agree not to compete, and join to make strategies to manipulate the market
When two or more firms agree not to compete, and join to make strategies to manipulate the market it is known as?
Cartel conduct
Law of demand
As the price of a product goes up, the demand goes down and vice versa
As the price of a product goes up, the demand goes down is known as the?
Law of demand
Law of supply
As the price of a good or service increases, there will be a increase in the quantity supplied
Law of demand
As the price of a product goes up, the demand goes down and vice versa
As the price of a product goes up, the demand goes down is known as the?
Law of demand
a state where economic forces such as supply and demand are balanced and in the absence of external influences is known as?
Equilibrium
As the price of a good or service increases, there will be a increase in the quantity supplied is known as the?
Law of supply
Equilibrium
A state where economic forces such as supply and demand are balanced and in the absence of external influences
a state where economic forces such as supply and demand are balanced and in the absence of external influences is known as?
Equilibrium
Productivity
The volume of output that is produced from a number of inputs and refers to how well factors of production combine to produce goods and services
The volume of output that is produced from a number of inputs and refers to how well factors of production combine to produce goods and services is known as?
Productivity
What is aggregate demand?
The total expenditure on Australian goods
The total expenditure on Australian goods is known as?
Aggregate demand
What us aggregate supply?
The total value of goods and services available for sale in a economy in a given time frame
The total value of goods and services available for sale in a economy in a given time frame is known as?
Aggregate supply
What is allocative efficiency?
A type of efficiency measured by how well resources are allocated and whether or not living standards are maximised as a result
A type of efficiency measured by how well resources are allocated and whether or not living standards are maximised as a result is known as?
Allocative efficiency
What is a Balanced budget?
When government revenue is the same as government expenditure
When government revenue is the same as government expenditure it is known as a?
Balanced budget
What is the Benefit cost ratio?
A ratio of benefits where a ratio greater than one indicates a projects benefits outweigh the costs
A ratio of benefits where a ratio greater than one indicates a projects benefits outweigh the costs is known as?
The Benefit cost ratio
What is budget constraint?
The amount of income consumers have at their disposal to spend on goods and services
The amount of income consumers have at their disposal to spend on goods and services is known as?
Budget constraint
What is budget surplus?
When government revenue exceeds government expenditure
When government revenue exceeds government expenditure it is known as a?
Budget surplus
What is business confidence?
The communities perception of their future levels of sales and profitability
The communities perception of their future levels of sales and profitability is known as?
Business confidence
What is capital?
Resources that have been made by combining labour and natural resources to create a more sophisticated input in the production process, “machinery”
Resources that have been made by combining labour and natural resources to create a more sophisticated input in the production process, “machinery” are known as?
Capital
What is a commodity?
Raw materials such as minerals and agricultural products
Raw materials such as minerals and agricultural products are known as?
Commodities
What are company taxes?
Taxes paid by corporations
Taxes paid by corporations are known as?
Company taxes
What is a competitive market?
Where all economic agents are price takers, and no individual buyer or seller has the power to influence market prices
Where all economic agents are price takers, and no individual buyer or seller has the power to influence market prices it is known as a?
Competitive market
What is consumer confidence?
An economic indicator that measures the degree of optimism that consumers feel about the overall state of the economy and their personal financial situation
An economic indicator that measures the degree of optimism that consumers feel about the overall state of the economy and their personal financial situation is known as?
Consumer confidence
What is consumer sentiment?
Consumer confidence
What is a consumer surplus?
The benefit consumers receive if they obtain a good or service for less than the maximum they are willing to pay?
Eg If someone was willing to buy a house for $600,000 and got it for $500,000 the consumer surplus is $100,000
The benefit consumers receive if they obtain a good or service for less than the maximum they are willing to pay it is known as a?
Consumer surplus
What is consumption expenditure?
An exchange of money for goods and services
An exchange of money for goods and services is known as?
Consumption expenditure
What is contraction?
A downturn in economic activity
A downturn in economic activity is known as a?
Contraction
What is a cost-benefit analysis?
A comparison of the expected costs and the expected benefits of a particular course of action or project
A comparison of the expected costs and the expected benefits of a particular course of action or project is known as a?
Cost benefit analysis
What is a default?
When borrowers fail to promptly pay interest on a loan or the principle on a loan when it falls due
When borrowers fail to promptly pay interest on a loan or the principle on a loan when it falls due it is known as a?
Default
What is deflation?
A decrease in the average price level over time
A decrease in the average price level over time is known as?
Deflation
What is depreciation?
When one currency is able to purchase less of another currency
When one currency is able to purchase less of another currency it is known as?
Depreciation
What is a direct tax?
A tax paid directly by economic agents, normally based on the income they earn
A tax paid directly by economic agents, normally based on the income they earn is known as a?
Direct tax
What is disequilibrium?
When the market is in a state of excess demand or supply
When the market is in a state of excess demand or supply it is known as?
Disequilibrium
What are dividends?
The payment of profit to shareholders
The payment of profit to shareholders are known as?
Dividends
What are economic agents?
Any entity such as a person, household, government or business that makes economic decisions
Any entity such as a person, household, government or business that makes economic decisions is known as a?
Economic agent
What is a efficient allocation of resources?
A situation where the economies scarce factors of production are allocated to the production of the goods and services that society values most
A situation where the economies scarce factors of production are allocated to the production of the goods and services that society values most is known as a?
Efficient allocation of resources
What is elasticity?
The responsiveness of demand and supply to a change in a variable such as price
The responsiveness of demand and supply to a change in a variable such as price is known as?
Elasticity
What is equilibrium price?
The price at which the quantity demanded is equal to the quantity supplied
The price at which the quantity demanded is equal to the quantity supplied is known as the?
Equilibrium price
What is equity?
The ownership of assets such as shares
The ownership of assets such as shares is known as?
Equity
What are ethics?
The moral principles that guide a persons behaviour and can therefore influence the consumption and production of goods
The moral principles that guide a persons behaviour and can therefore influence the consumption and production of goods are known as?
Ethics
What are externalities?
When the production or consumption of a good or service has an effect on a third party or bystander
When the production or consumption of a good or service has an effect on a third party or bystander, it is known as a?
Externality
What is factor income?
The total returns of production for the contribution to production
The total returns of production for the contribution to production is known as?
Factor income
What is financial capital?
Funding or money that is typically used to finance the acquisition of assets
Funding or money that is typically used to finance the acquisition of assets is known as?
Financial capital
What is fiscal drag?
The deflationary effect of a progressive taxation system on a country’s economy. As wages rise, a higher proportion of income is paid in tax
The deflationary effect of a progressive taxation system on a country’s economy. As wages rise, a higher proportion of income is paid in tax is known as?
Fiscal drag/Bracket creep
What are fixed costs?
Costs of production that do not vary with the quantity of goods or services produced and are present regardless
Costs of production that do not vary with the quantity of goods or services produced and are present regardless are known as?
Fixed costs
What is free trade?
Where nations can engage in international trade without facing protection or trade barriers from other countries
Where nations can engage in international trade without facing protection or trade barriers from other countries, it is know as?
Free trade
What are fringe benefits?
Non-monetary reward for contribution to the production process
Eg company car
Non-monetary reward for contribution to the production process are known as?
Fringe benefits
What is GDP
Gross domestic product
What is GDP per capita?
GDP per person
What are goods?
Physical items of value that are traded in markets
Physical items of value that are traded in markets are?
Goods
What is government business enterprise?
A business owned and operated by the government
A business owned and operated by the government is known as?
Government business enterprise
What is homo economicus?
The rational economic man that is trying to maximise utility by purchasing goods and services that reflect their preferences
The rational economic man that is trying to maximise utility by purchasing goods and services that reflect their preferences is known as?
Homo economicus
What is income?
Money that is typically received on a regular or recurring basis
Money that is typically received on a regular or recurring basis is known as?
Income
What is indirect tax?
A tax paid by economic agents via the purchase of goods and services
A tax paid by economic agents via the purchase of goods and services is known as?
Indirect tax
What are interest rates?
The cost of borrowing money or the rate of return from lending money
The cost of borrowing money or the rate of return from lending money are known as?
Interest rates
What is investment expenditure?
The purchase of new equipment
Eg factory/inventory
The purchase of new equipment
Eg factory/inventory is known as?
Investment expenditure
What is labour cost advantage?
When a countries labour cost is lower than another
When a countries labour cost is lower than another it is known as the?
Labour cost advantage
What is lasseiz faire?
The belief in a free market with minimal government intervention
The belief in a free market with minimal government intervention is known as?
Lasseiz faire
What is the law of diminishing marginal utility?
Where each additional unit of a good or service generates less utility and thus the price goes down
Where each additional unit of a good or service generates less utility and thus the price goes down is known as the?
Law of diminishing marginal utility
What is marginal utility?
The satisfaction that consumers gain from consuming an additional unit of a good or service
What is market failure?
A situation in which the allocation of goods and services is not efficient
A situation in which the allocation of goods and services is not efficient is known as?
Market failure
What is market power?
The ability of any particular business to manipulate prices or quantities
The ability of any particular business to manipulate prices or quantities is known as?
Market power
What is market structure?
The way markets are structured based on the type of buyers and sellers present
The way markets are structured based on the type of buyers and sellers present is known as?
Market structure
What is a monopolistic competition?
Monopolistic competition is a type of imperfect competition such that many producers sell products that are differentiated from one another (e.g. by branding or quality) and hence are not perfect substitutes.
What market is a type of imperfect competition such that many producers sell products that are differentiated from one another (e.g. by branding or quality) and hence are not perfect substitutes?
Monopolistic competition
What is multibranding?
Where companies market their products under separate and distinct brand names
Where companies market their products under separate and distinct brand names it is known as?
Multibranding
What are net benefits?
Benefits less costs - can be good or bad
What are net exports?
Exports minus imports
What are non material living standards
The aspects of a persons quality life that can not be measured by monetary factors
The aspects of a persons quality life that can not be measured by monetary factors are known as?
Non material living standards
What is nudge?
Subtly coaxing people into making good choices without having to resort to heavy financial incentives or sanctions
Subtly coaxing people into making good choices without having to resort to heavy financial incentives or sanctions is known as?
Nudge
What are preferences?
A consumers likes and dislikes
A consumers likes and dislikes are known as?
Preferences
What is a producer surplus
An economic measure of the difference between the amount a producer of a good receives and the minimum amount the producer is willing to accept for the good
An economic measure of the difference between the amount a producer of a good receives and the minimum amount the producer is willing to accept for the good is known as?
A producer surplus
What is product differentiation?
The marketing of generally similar products with minor variations that are used by consumers when making a choice
The marketing of generally similar products with minor variations that are used by consumers when making a choice is known as?
Product differentiation
What is the production possibility frontier?
A diagram that shows the maximum possible output combinations of two goods or services an economy can achieve when all resources are fully and efficiently employed
A diagram that shows the maximum possible output combinations of two goods or services an economy can achieve when all resources are fully and efficiently employed is known as the?
Production possibility frontier
What is productivity?
An economic measure of output per unit of input
An economic measure of output per unit of input is?
Productivity
What is profit?
When sales exceed expenses
When sales exceed expenses it is known as?
Profit
What is a progressive tax?
A tax that takes more from high income earners
A tax that takes more from high income earners is known as a?
Progressive tax
What is real income?
The income of an individual or group after taking into consideration the effects of inflation on purchasing power
The income of an individual or group after taking into consideration the effects of inflation on purchasing power is known as?
Real income
What is relative price?
The price of one good compared to another
The price of one good compared to another is known as?
Relative price
What is relative scarcity?
The circumstance that we do not have enough resources to satisfy all our wants and needs
The circumstance that we do not have enough resources to satisfy all our wants and needs is known as?
Relative scarcity
What is a subsidiary?
A company controlled by a holding company
A company controlled by a holding company is known as a
Subsidiary
What is a subsidy?
A sum of money granted by the state or a public body to help an industry or business keep the price of a commodity or service low
A sum of money granted by the state or a public body to help an industry or business keep the price of a commodity or service low is known as?
A subsidy
What is an tax incentive?
An aspect of a country’s tax code designed to incentivize, or encourage a particular economic activity
What are Diminishing marginal returns?
The decrease in the marginal output of a production process as the amount of a single factor of production is increased, while the amounts of all other factors of production stay constant
The decrease in the marginal output of a production process as the amount of a single factor of production is increased, while the amounts of all other factors of production stay constant is known as?
Diminishing marginal returns
What is a sharing economy?
An economic system in which assets or services are shared between private individuals, either free or for a fee, typically by means of the Internet
An economic system in which assets or services are shared between private individuals, either free or for a fee, typically by means of the Internet is known as?
Sharing economy
What is market power?
The ability of a firm to profitably raise the market price of a good or service over marginal cost
The ability of a firm to profitably raise the market price of a good or service over marginal cost is known as?
Market power
What are some characteristics of conventional economics
For economic analysis, the assumptions made about people don’t have to be realistic, People are pretty much all the same people are different, with different tastes and preferences, markets are efficient even if they appear to be inefficient, efficiency is everywhere
What is expansion along the curves?
When price goes up along with supply
What is contraction along the curves?
When price goes down along with supply
