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Economics Theme 1-Markets, Consumers and Firms > Glossary > Flashcards

Glossary Flashcards

1
Q

What is Added Value?

A

It’s the difference between the price of a good or service and the cost of its material inputs

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2
Q

What is Cash Flow?

A

The movement of cash into and out of a business

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3
Q

What is a Complement?

A

Goods and services that are brought together.

For example Cars and petrol or DVDs and DVD players

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4
Q

What is the Equilibrium Price?

A

The price at which quantity demanded is the same as quantity supplied, sometimes called the market clearing price.

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5
Q

What is the Break-even-point?

A

The level of output where neither a profit nor a loss is being made. The point at which total revenue equals total costs.

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6
Q

What is Demand?

A

The quantity of a good or service that consumers are willing and able to buy, at given price and at a given time.

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7
Q

What is the Exchange Rate?

A

The price of one currency expressed in terms of another. It is determined by the interaction of demand for and supply of the currency

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8
Q

What are Exports?

A

Goods and services produced domestically and sold in a foreign country.

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9
Q

What are External Costs?

A

Negative side effects imposed on a third party who is neither the producer nor the consumer.

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10
Q

What is an Opportunity Cost?

A

Represents cost in terms of an alternative to the item actively chosen. Every spending decision has an opportunity cost, which is what was foregone to get the preferred product.

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11
Q

What is Market Failure?

A

This occurs when social costs exceed social benefits. This frequently happens when there are negative externalities.

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12
Q

What is a market?

A

Any medium in which buyers and sellers interact and agree to trade at a price

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13
Q

What is Gross profit?

A

Turnover (Revenue) - Cost of sales

Overheads (fixed costs), interest and tax have not yet been taken into account

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14
Q

What is Inflation?

A

A sustained rise in the general price level or a fall in the value of money.

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15
Q

What is the Interest rate?

A

A payment in percentage terms for the use of a sum of borrowed money. It can be seen as the price of money.

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16
Q

What are Fixed costs?

A

They do not change with the level of output of the business. Examples include rent, interest payments, managers’ salaries and business rates

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17
Q

What is Market research?

A

It’s any kind of activity that gives a business information about its product or service, its customers, its competitors or the market it operates in.

18
Q

What is Market share?

A

The percentage of the total market buying one firm’s product.

19
Q

What is Operating profit?

A

The most commonly used measure of business profit, calculated by subtracting all overheads (fixed costs) from gross profit

Fixed costs - Gross profit

20
Q

What is the Operating profit margin?

A

Operating profit shown as a percentage of turnover.

21
Q

What is Market orientation?

A

Where the needs of the customer are the overriding priority in the production and marketing of products and services

22
Q

What are the Factors of production?

A

Land
Labour
Capital
Enterprise

23
Q

What is are Negative externalities?

A

External costs that have a detrimental effect on the lives of people who neither bought nor sold the product

24
Q

What are Positive externalities?

A

External benefits that are experienced by third parties but paid for by someone else

25
Q

What is Revenue?

A

The income of a business raised by selling its goods or services

26
Q

What are Social benefits?

A

The total benefits of producing goods and services, calculated by adding together the private and external costs.

27
Q

What is Turnover?

A

Sales revenue I.e. Total income generated by a business selling its goods and services over a period of time.

28
Q

What is Trade credit?

A

The time allowed by a supplier before a business must make payment. Commonly 30-60 days, it helps the customers cash flow at the expense of the that of the seller

29
Q

What is Product differentiation?

A

Means giving each product specific design features that will distinguish it from competing products. Branding can be an important part of this.

30
Q

What are Social Costs?

A

The total costs of producing goods and services, calculated by adding together the private and external costs.

31
Q

What is Taxation?

A

Payments made to the government by individuals and businesses, top provide revenue government spending. Commonly used taxes include: income tax, VAT, corporation tax and excise duty.

32
Q

What is a Substitute?

A

A good or service that can be used in place of another, e.g different brands of washing powder or makes of television.

33
Q

What is Retained profit?

A

An important source of finance for business expansion. It is the profit left after interest, tax and dividends have been deducted from operating profit.

34
Q

What is Sampling?

A

During market research, a small section or sample of market is chosen as being representative of the whole.

35
Q

What are Shareholders?

A

They are part-owners of the business. They may have played a part in financing the business directly, or have brought shares from someone else or on the Stock Exchange.

36
Q

What are Variable costs?

A

Costs of production that vary with the level of output e.g. Raw materials and distribution costs

37
Q

What is Venture capital?

A

A form of business finance, unsecured funding provided by individuals or specialist firms in return for a proportion of the company’s shares

38
Q

What is Under-consumption?

A

Occurs when products that are socially desirable are too expensive for everyone to cover the costs themselves

39
Q

What is Supply?

A

The amount of a good or service that producers are willing and able to provide, at a given price and at a given time

40
Q

What is Profit?

A

The difference between total sales revenue and total costs.

41
Q

What is the public sector?

A

Industries or services provided or funded by the government and not owned by private individuals.

Economics Theme 1-Markets, Consumers and Firms (1 decks)

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