Key terms Flashcards
Allocation of resources
The uses to which the factors of production are put
Allocative efficiency
The state of the economy in which supply is in accordance with consumer preferences
Basic needs
The five things essential to human survival: Food, drink, clothes, shelter, warmth
Capital
The factor of production that represents all machinery and tools
Commodities
Raw materials and agricultural products that can be bought or sold
Commodity Markets
where buyers and sellers of commodities trade and set the prices for these products
Consumers
The people who use a good or service that has been bought from a business
Consumer goods
Goods that are made to be used by the final consumer
Consumption
The act of using a product
Customer
Any person or business that buys goods or services from a business
Economic agent
The people or groups that make key decisions with in an economy
Economic goods
Goods and services, made from economic resources, that have opportunity costs
Economic Problem
There are unlimited wants but limited resources with which to satisfy them
Economic Resources
Factors of production used in the production of goods and services that which have an opportunity cost.
Enterprise
The factor of production that organises all the other factors of production
Equilibrium
The state of the economy in which demand is equal to supply so there is no incentive to change
Factors of Production
The scarce resources used in the production of goods and services: Land, Labour, capital and enterprise
Invisible Hand
The processes of supply and demand that allocate scarce resources automatically.
Labour
The factor of production that represents the physical and mental effort put into to producing a good or service
Land
The factor of production that represents all raw materials used in the production process
Macro economics
The part of economics concerned with the economy as a whole
Manufacturing
The process of making a good. Turning raw materials into something that can resold
Marginal rate of subsitution
The speed as witch a consumer can exchange some of one good for another whilst maintaining the same output
Micro economics
The part of economics concerned with the study of the individual consumers and firms
Model
A scientific simplification of the way in which something works in order to study how it works
Normative economics
The part of economics concerned with opinions and value judgements
Opportunity cost
The alternative that is given up when choosing one thing instead of another
Positive economics
The part of economics that is concerned with facts and statements that can be proved to be true
Primary production
Getting raw materials, such as oil, fish or coals, from the land or sea. Or using the earth to grow things such as crops or trees.
Privately provided Goods
Goods or services that are manufactured and supplied by firms which are not owned by the government
Production Possibility
The maximum output that can be produced from a given set of scarce resources, which have been used as efficiently as possible.
Production possibility curve
A graphical representation of all the possible combinations of goods and services that can be produced by using all of the available goods and services as efficiently as possible
Productive efficiency
Producing a good or service for the minimum average unit cost
Products
Any goods or services
Publicly provided goods
Products which are created and sold by the government
Relative needs
Products that become necessary to survive within the society in which you live
Scarcity
The existence of only a limited quantity of something
Scientific Method
The process of investigating something in a systematic way. It involves observation, measurement, and experiments and the formulation, testing and modification of a hypotheses
Secondary production
Processing raw materials into finished goods
Tertiary Production
Providing a service to any branch of industry or consumers
Wants
Desires to obtain a good or service that you do not have
A Market
Any way of putting buyers and sellers in touch so they can exchange goods or services
Complements
Products that are often bought together as they work well together so are often consumed together e.g bread and butter
Composite Demand
When goods or services have more than one use. So an increase in the demand for one leads to a decrease in the supply of another.
Consumer surplus
The difference between what the consumers would be prepared to pay for a product and the price they actually pay. Its a measure of the extra benefit the consumers receive
Contraction
A leftward movement along a demand or supply curve
Cross elasticity of demand
The measure of responsivenss of the demand for one product in response to a change in price of another product
Demand
The amount of goods and services people are willing to buy at a given price over a given period of time.
Disequilibrium
Where the forces of supply and demand are not balanced causing incentive to change
Derived Demand
Where the demand for one product is created because it is required to satisfy the demand for another
Excess
Where there is a surplus of something
Extension
A movement to the right along a supply or demand curve
Giffen good
A product with a demand curve that’s upwards sloping left to right. Because the effect of a price increase reducing real income means that consumers buy fewer other products in order to buy the more expensive one or in order to be able to buy their necessities.
Incentives
A situation where there is a force influencing an economic agent to make a decision in a certain way
Incentivising
An action that creates a force influencing an economic agent to make a decision in a specific way
Income elasticity of demand
A measure of the responsiveness of consumer demand in response to a change in income
Inferior goods
Products for which the demand increases as price increases
Joint Demand
Products that are demanded together because they are both needed to provide the benefit to the consumer
Jointly supplied goods
Products that are supplied at the same time, usually because one is a by product of the other one
Luxury goods
Products who’s demand increases by a relatively large amount as income increases
Market segment
Groups of consumers within a market that have similar wants or desires
Market share
The proportion of the total sales of a market that a product - or business - holds
Market stability
A measure of how quickly and how regularly prices and output in a market change. Where changes are slow and infrequent a market is said to be stable
Market stability
A measure of how quickly and how regularly prices and output in a market change. Where changes are slow and infrequent a market is said to be stable
Markets
Where buyers and sellers exchange goods and services
Normal Goods
Products who’s demand will increase as consumer income increases
Price elasticity of demand
A measure of the responsiveness of demand to a change in price of a good or service
Price elasticity of supply
A measure of the responsiveness of supply to a change in price
Producer Substitutes
Alternative scarce resources that a firm could use in production instead of the ones that it usually uses
Producer surplus
The difference between what a firm would receive from the sale of a product in a market and the minimum price that they they would be prepared to accept for it
Quality good
A product which demand curve slopes upward and from left to right as demand increase as price increase. This is because as price rises people think its quality has increased and so demand more
Rationing
The process of restricting the availability of goods and services so that not everyone can access them
Shortage
When the demand for a product is greater than the available supply so the prices rise.
Signalling
The act of giving information about a good or service to an economic agent
Speculative goods
A good or service with a demand curve that slopes upwards from left to right a result of people interpreting s price increase as an indication that the prices will continue to rise
Substitutes
Products that are alternatives to each other and cancer used in place of each other
Surplus
When the supply for a product is greater than the demand so prices fall
Veblen Goods
A product who’s demand curve slopes upwards from left to right because was the prices rise ownership of that product takes on ‘snob appeal’ so people demand more
Division of Labour
Dividing jobs up into smaller and simpler tasks
Labour productivity
The amount of work done per worker in a given period of time
Specialisation
The act of concentrating one or a small number of things in order to get good at them
Surplus Output
The extra output created by specialisation we don’t need for ourselves
Surplus Value
The difference between the cost of producing a product and the price that consumers are prepared to pay, which the workers create but are not paid for.
