Key terms 3 Flashcards
Oligopoly
A market structure where a few large firms dominate
Opportunity cost
The next best alternative given up when an economic decision is made
Partial market failure
Where the free market provides a product but witha misallocation of resources
Perfect competition
An extremely competive market structure
Pollution permit
A permit sold to firms by the government, allowing them to pollute up to a certain limit
Positive externality
A beneficial spillover effect to third parties of a market transaction
Price elasticity of demand
The responsiveness of quantity demanded to a change in price
Price elasticity of supply
The responsiveness of quantity supllied to a change in price
Private good
A good that is both excludable and rival in consumption
PPC/PPB
Production possibility curve/boundary. A diagram showing the maximum possible output that can be achieved given a fixed amount of resources
Productive efficiency
When a firm operates at minimum average total cost
Productivity
A measure of efficiency, typically expressed as output per person per hour
Profit
When total income or revenue of a firm is greater than the total costs
Public good
A good that posses the characteristics of non excludibilty and non rivalry in consumption
Quasi public good
A good that has some of the characteristics of a public good, but is not completley non excludable or non rival
Scarcity
The economic problem, society’s wants exceed the amount available of the factors of production
Specialisation
The production of a lomited range of goods by an individual factor of production,firm or country, in co operation with others so that together a complete range of goods is produced
Supply
The quantity of a product offered for sale by firms at a given price
Variable costs
Costs of production that vary with output
