Key terms

Question 1

Goods

Answer 1

Tangible things that can be consumed eg clothes

Question 2

Services

Answer 2

Actions people perform eg hairdressers

Question 3

Factor markets

Answer 3

The market for a factor of production that makes goods or services

Question 4

Economic welfare

Answer 4

The level of prosperity and quality of living standards in an economy

Question 5

Renewable resource

Answer 5

Natural resource that can be replenished naturally over time

Question 6

Derived demand

Answer 6

Demand for one product or service causes a rise in demand for another product or service

Question 7

Markey supply

Answer 7

Supply is the quantity of a good or service that a producer is willing and able to supply onto the market at a given price in a given time period

Question 8

Extension supply

Answer 8

Increase in supply because market price has risen

Question 9

Contraction in supply

Answer 9

Decrease in supply because market price has decreased

Question 10

Joint supply

Answer 10

The supply of more than one product from a single source

Question 11

Consumer goods

Answer 11

Good or service that satifies consumer wants, can be durable as they last a long time like cars or non durable as they have a short life like matches

Question 12

Capital goods

Answer 12

Man made resources which help to produce other goods, ot will increase production and help economy grow eg factories + machinery

Question 13

Normative statement

Answer 13

Is an opinion that requires valued judgements to be made. ‘wgat ought to be’

Question 14

Positive statement

Answer 14

Can be tested can be tested against real world data

Question 15

Demand

Answer 15

The amount that customers are willing and able to buy at a given price level

Question 16

Market demand

Answer 16

Total demand in a market for a good

Question 17

Composite demand

Answer 17

A good that is demanded for more than one purpose so an increase in demand for one purpose reduces the supply for the other purpose,typically leading to higher prices

Question 18

Zero pricing

Answer 18

when goods are provided free at the point of use

Question 19

Division of labour

Answer 19

Breaking the production process down into a sequence of task,with workers assigned to particular tasks

Question 20

Specialisation

Answer 20

A worker performing only one task or a narrow range of tasks

Question 21

Diseconomies of scale

Answer 21

An increase in the scale of production leads to an increase in the costs for the firm

Question 22

Substitute goods

Answer 22

Goods that can be used as alternatives

Question 23

Allocative resources

Answer 23

Producing the mix of goods and services that society values the most

Question 24

Buffer stock

Answer 24

An intervention system that aims to stabilise prices

Question 25

Capital

Answer 25

Productive resources

Question 26

Ceteris paribus

Answer 26

All other factors remaining constant

Question 27

Command economy

Answer 27

An economic system where all decisions about resource allocation are made by the state

Question 28

Complementary product

Answer 28

A product generall consumed together with another e.g fish and chips

Question 29

Cross elasticity of demand

Answer 29

The responsiveness of quantity demanded of one good to the change in price of another good

Question 30

Demerit good

Answer 30

A good that would be over consumed in a free market as it brings less overall benefit to consumers than they realise

Question 31

Depreciation

Answer 31

The rate at which capital loses value over time

Question 32

Disequilibrium

Answer 32

When supply in a market does not meet demand

Question 33

Economic goods

Answer 33

Goods that are scarce and therefore have an opportunity cost in consumption

Question 34

Economic welfare

Answer 34

The benefit or satisfaction an individual gets from the allocation of resources

Question 35

Economies of scale

Answer 35

Wgere an increase in the scale of production leads to reductions in average total costs for firms

Question 36

Effective demand

Answer 36

Demand backed up by the ability to pay for a good or service

Question 37

Enterprise

Answer 37

The risk-taking role of business owners in combining other factors of production

Question 38

Equilibrium

Answer 38

The market situation where planned demand equals planned supply therefore no tendenct for change