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(Micro) Economics / Paper 1 > Key terms > Flashcards

Key terms Flashcards

1
Q

Define consumer

A

A person or organisation that directly uses a good or service

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2
Q

Define producer

A

A person, company or country that makes, grows or supplies goods and services

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3
Q

Define government

A

A political authority that decides how a country is run and manages its operation

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4
Q

Define a good

A

A tangible product

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5
Q

Define a service

A

An intangible product

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6
Q

Define profit

A

The amount of money a seller has left after all the costs have been paid

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7
Q

Define production

A

The total output of goods and services produced by a firm or industry in a time period

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8
Q

Define factors of production

A

The resources in an economy that can be used to make goods and services

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9
Q

Define land

A

The natural resources available for production in an economy

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10
Q

Define capital

A

The man-made aids to production in an economy

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11
Q

Define labour

A

The workforce available for production in an economy

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12
Q

Define enterprise

A

The factor of production that involves taking a risk and organising the other three factors in production

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13
Q

Define the economic problem

A

How to best use scarce resources to satisfy the unlimited wants of people

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14
Q

Define unlimited wants

A

The infinite desire for something

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15
Q

Define scarce resources

A

When there is an insufficient amount of something to satisfy all wants

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16
Q

Define opportunity cost

A

The next best alternative given up when making a choice

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17
Q

Define economic choice

A

An option for the use of selected scarce resources

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18
Q

Define economic sustainability

A

The best use of resources in order to create growth or development, both now and into the future

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19
Q

Define social sustainability

A

The impact of growth or development that promotes an improvement in quality of life for all, now and into the future

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20
Q

Define environmental sustainability

A

The impact of growth or development where the effect on the environment is small and possible to manage, now and into the future

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21
Q

Define a market

A

A way of bringing together buyers and sellers to buy and sell goods and services

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22
Q

Define market economy

A

An economy in which scarce resources are allocated by the market forces of supply and demand

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23
Q

Define the primary sector

A

The direct use of natural resources e.g. the extraction of basic materials and goods from land and sea.

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24
Q

Define the secondary sector

A

All activities in an economy that are concerned with either manufacturing or construction

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25
Q

Define the tertiary sector

A

All activities in an economy that involve the idea of service

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26
Q

Define product market

A

Where final goods and services are offered to consumers, businesses and the public sector

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27
Q

Define factor market

A

Where the services of the factors of production are bought and sold

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28
Q

Define specialisation

A

The process by which individuals, firms, regions and countries concentrate on producing those products that they are best at doing

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29
Q

Define exchange

A

The giving up of something that an individual or firm has in return for something they wish to have, but do not possess

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30
Q

Define division of labour

A

Where workers specialise in, or concentrate on, one area of the production process

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31
Q

Define demand

A

The willingness and ability to purchase a good or service at the given price in a given time period

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32
Q

Define law of demand

A

Normally, the quantity demanded varies inversely with the price

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33
Q

Define individual demand

A

The demand for a good or service by an individual consumer

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34
Q

Define market demand

A

The total demand for a good or service in a given time period, found by adding together all individual demands.

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35
Q

Define demand curve

A

A graph showing how the demand for a product varies with changes in its price

36
Q

Define a shift of the demand curve

A

A complete movement of the existing demand curve

37
Q

Define a movement along the demand curve

A

When the price changes, due to a change in supply, leading to a movement up or down the existing demand curve

38
Q

Define tax

A

A compulsory payment to the government

39
Q

Define subsidy

A

An amount of money the government gives directly to firms to encourage production and consumption

40
Q

Define price elasticity of demand (PED)

A

The responsiveness of quantity demanded to a change in the price of a product

41
Q

Define elastic demand

A

When the percentage change in quantity demanded is greater than the percentage change in price

42
Q

Define inelastic demand

A

When the percentage change in quantity demanded is less than the percentage change in price

43
Q

Define supply

A

The ability and willingness of firms to provide goods and services at each price in a given time period

44
Q

Define law of supply

A

Normally, the quantity supplied varies directly with the price

45
Q

Define supply curve

A

A graph showing how the supply of a product varies with changes in its price

46
Q

Define individual supply

A

The supply of a good or service by an individual producer

47
Q

Define market supply

A

The total supply of a good or service as a result of adding together all individual producers’ supplies

48
Q

Define a shift of the supply curve

A

A complete movement of the existing supply curve

49
Q

Define a movement along the supply curve

A

When the price changes, due to a change in demand, leading to a movement up or down the existing supply curve

50
Q

Define price elasticity of supply (PES)

A

The responsiveness of quantity supplied to a change in the price of a product

51
Q

Define elastic supply

A

When the percentage change in quantity supplied is greater than the percentage change in price

52
Q

Define inelastic supply

A

When the percentage change in quantity supplied is less than the percentage change in price

53
Q

Define unitary supply

A

When the percentage change in quantity supplied is the same as the percentage change in price

54
Q

Define price

A

The sum of money which has to be paid for a good or service

55
Q

Define efficiency

A

The optimal production and distribution of scarce resources

56
Q

Define equilibrium price and quantity

A

Where the quantity supplied exactly matches the quantity demanded

57
Q

Define determination of price

A

The interaction of the market forces of demand and supply to establish the general level of prices for a good or service

58
Q

Define allocation of resources

A

How scarce resources are distributed among producers and how scarce goods and services are allocated among consumers

59
Q

Define market forces

A

Factors that determine price levels and the availability of goods and services in an economy without government intervention

60
Q

Define competition

A

Where different firms are trying to sell a similar product to a consumer

61
Q

Define monopoly

A

A sole producer or seller of a good or service

62
Q

Define oligopoly

A

Where a small number of firms control the majority of the market

63
Q

Define productivity

A

The output per unit of input

64
Q

Define total cost

A

All the costs of the firm added together

65
Q

Define average cost

A

The cost of producing a unit of output

66
Q

Define total revenue

A

The total income of the firm from the sale of its goods and services

67
Q

Define average revenue

A

The revenue per unit sold

68
Q

Define loss

A

When a firms revenue is less than its costs

69
Q

Define economies of scale

A

The cost advantages a firm can gain by increasing the scale of production

70
Q

Define a labour market

A

Where workers sell their labour and employers buy the labour

71
Q

Define supply of labour

A

The total number of people who are willing and eligible to supply their labour, including the unemployed

72
Q

Define gross pay

A

The amount of money that an employee earns before any deductions are made

73
Q

Define net pay

A

The amount of money that an employee is left with after deductions are made from the gross pay

74
Q

Define income tax

A

A tax levied on personal income

75
Q

Define national insurance

A

A contribution paid by workers and their employers towards the cost of state benefits

76
Q

Define pension

A

A fixed amount paid at regular intervals to a person or their surviving dependants

77
Q

Define money

A

Anything that is acceptable as a means of payments for goods and services

78
Q

Define medium of exchange

A

Anything that sets the standard of value of goods and services acceptable to all parties involved in a transaction

79
Q

Define financial sector

A

Consists of financial organisations and their products and involves the flow of capital

80
Q

Define banks

A

Financial institutions licensed to receive deposits and make loans

81
Q

Define building societies

A

Mutual financial organisations that are owned by their members

82
Q

Define investments

A

The purchase of capital goods that are used to produce future goods and services, also an asset purchased to provide income in the future and/or to be sold for profit

83
Q

Define interest rates

A

The cost of borrowing money

84
Q

Define a mortgage

A

An agreement with a financial institution to borrow money to purchase a property

85
Q

Define insurance

A

A contract in which an individual or organisation receives financial protection or reimbursement against losses, from an insurance company

86
Q

Define saving

A

The part of an individual’s income which is not spent on consumption

87
Q

Define borrowing

A

Receiving money in exchange for an obligation to pay it back at a specified time in the future

(Micro) Economics / Paper 1 (2 decks)

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