key terms Flashcards
What is opportunity cost?
The next best alternative given up when making a choice.
What is international trade?
Exchange of goods and services between countries.
What is a want?
Something a consumer would like to have but is not necessary for survival.
What is a good?
A tangible product.
What is variable cost?
All costs of production that change as output changes.
What is unitary demand/supply?
When % change in quantity = % change in price.
What is total revenue?
Total income of a firm from the sale of its goods or services.
What is total cost?
All costs of a firm added together.
What is the tertiary sector?
All activities in the economy that involve the idea of a service.
What is supply?
Ability and willingness of firms to provide goods and services at each price in a given time period.
What is a substitute?
Good/service that can be used in place of another.
What is a subsidy?
Amount of money government gives directly to firms to encourage production and consumption.
What is specialisation?
Process by which individuals, firms, regions and whole economies concentrate on producing those products they are best at producing.
What is social sustainability?
Impact of development or growth that promotes an improvement in quality of life for all, now and into the future.
What is a shift of the supply/demand curve?
Complete movement of existing supply/demand curve either outward (right) or inward (left).
What is a service?
An intangible product.
What is the secondary sector?
All activities in the economy concerned with either manufacturing or construction.
What are scarce resources?
Insufficient amount of something to satisfy all wants.
What is a recession?
A period when the country’s GDP falls for 2 or more consecutive quarters.
What is profit?
Amount of money a producer has left after all costs have been paid, when TR > TC.
What is a product market?
Market in which final goods or services are offered to consumers, businesses and the public sector.
What is productivity?
Measure of degree of efficiency in use of factors of production in process. Measured in terms of output per unit of input.
What is production?
Total output of goods and services produced by a firm or industry in a time period.
Who is a producer?
Person, company or country that makes, grows or supplies goods or services.
What is the private sector?
Part of the economy that is run by individuals, firms and organisations and not by the government.
What is the primary sector?
Direct use of natural resources, such as the extraction of basic materials and goods from the land and sea.
What is price stability?
When general level of prices stays constant over time or grows at an acceptably low rate.
What is price elasticity of demand/supply?
The responsiveness of quantity demanded/supplied to a change in the price of the product.
What is price?
Sum of money you have to pay for a good or service, determined by interaction of supply and demand.
What is an oligopoly?
Where a small number of firms control a large majority of market share.
What is net income?
Income available after the effect of direct taxes and benefits, often called disposable income.
What is a need?
Something a consumer has to have to survive.
What is movement along the demand/supply curve?
When price changes leading to a movement away from the origin (expansion) or a movement towards the origin (contraction) on the existing demand/supply curve.
What is a monopoly?
A sole producer or seller of a good or service.
What is money?
Anything that is generally accepted as a means of payment for goods and services.
What is a medium of exchange?
Anything that sets the standard of value of goods and services acceptable to all parties involved in a transaction.
What is market supply?
The total supply of a good or service as a result of adding together all individual producers’ supplies.
What is a market force?
Factors that determine price levels and availability of goods and services in an economy without government intervention.
What is a market economy?
Economy where scarce resources are allocated by market forces of supply and demand.
What is market demand?
Total demand for good/service found by adding together all individual demands.
What is a market?
Way of bringing buyers and sellers to buy and sell goods and services.
What is a loss?
When a firm’s revenue is less than its costs.
What is the law of supply?
For most products, quantity supplied varies directly with price.
What is the law of demand?
For most products, quantity demanded varies inversely with price.
What is land?
Factor of production associated with natural resources of economy.
What is the labour force?
Number of people working in the country.
What is labour?
Factor of production concerned with workforce of economy in terms of both physical and mental effort involved in production.
What is interest rate?
Price of borrowing money, and reward for saving it.
What is inflation?
Sustained rise in general price level over time.
What is inelastic supply?
% change in price > % change in quantity supplied.
What is inelastic demand?
% change in price > % change in quantity demanded.
What is income?
Reward for the service provided by a factor of production including labour.
What are imports?
Goods and services bought from abroad.
What is gross income?
Income received before any taxes are taken or benefits given.
What is gross domestic product (GDP)?
Total value added of goods and services produced in the country in a year.
What is government?
Political authority that decides how a country is run and manages its operation.
What are fixed costs (FC)?
All costs of the firm that have to be paid even if the output is 0. It does not vary with output.
What are factors of production?
Resources in an economy that can be used to make goods and services, e.g. capital, land, labour and enterprise.
What is a factor market?
Market in which the services of the factors of production are bought and sold.
What is expansion of supply?
Movement outwards along the supply curve, leading to an increase in both price and quantity.
What are exports?
Goods and services sold abroad.
What is exchange?
The giving up of something an individual has, in return for something they do not have but wish to possess.
What is excess demand (and supply)?
Where, at the current price, the amount demanded is greater than the amount sellers are willing to supply (vice versa).
What is equilibrium price and quantity?
Where quantity supplied exactly matches the quantity demanded.
What is environmental sustainability?
Impact of development or growth where the effect on the environment is small and possible to manage, now and into the future.
What is enterprise?
Factor of production that takes a risk in organising the other three factors of production.
What is employment?
Use of labour in economy to produce goods and services.
What is elastic supply?
% change in quantity supplied > % change in price.
What is elastic demand?
% change in quantity demanded > % change in price.
What is efficiency?
Concerned with optimal production and distribution of scarce resources.
What are economies of scale?
When average cost of production begins to fall as firm’s size grows; cost advantages a firm can gain by increasing the scale of production, leading to a fall in average costs.
What is economic sustainability?
Best use of resources in order to create responsible development or growth, now and for the future.
What is the economic problem?
How to best use limited resources to satisfy unlimited wants of people.
What is economic choice?
Option for use of select scarce resources.
What is economic growth?
Growth in GDP (value of output) over time.
What is the distribution of income/wealth?
How incomes/wealth is shared out between individuals and households.
What is disposable/net income?
Income available after effect of direct taxes and benefits.
What is a direct tax?
Tax on income or wealth.
What is demand?
Willingness and ability to purchase a good or service at the given price in a time period.
What is contraction of supply?
Movement inwards along supply curve, leading to a decrease in both price and quantity.
What is consumer sovereignty?
Through their purchase of goods and services, consumers are able to influence what producers supply and thus how resources are allocated.
Who is a consumer?
Person or organisation that directly uses a good or service.
What is a complement?
Good or service that goes together with another, such as cars and fuel.
What is competition?
Where different firms are trying to sell to a consumer a similar product.
What is capital?
Factor of production relating to human-made aids to production.
What is a building society?
Financial institution that receives deposits from members and lends money to them to purchase property.
What is a budget surplus?
When tax revenue is greater than government spending.
What is a budget deficit?
When government spending is greater than tax revenue.
What is the bank rate?
Rate set by the Bank of England that influences all other rates of interest in the country.
What is average revenue?
Revenue per unit sold.
What is average cost (AC)?
The cost of producing a unit (unit cost of production).
What is allocation of resources?
How scarce resources are distributed among producers, and how scarce goods and services are allocated among consumers.
