Key Terms Flashcards

1
Q

Scarcity

A

Economics resources are limited relative to society’s desire for goods and services

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2
Q

Economic good

A

A good or service whose production requires the use of scarce resources

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3
Q

Free good

A

A good or service which can be enjoyed without the need of scarce resources

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4
Q

Opportunity cost

A

The benefit that would have been enjoyed from the best alternative choice

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5
Q

Production possibility curve

A

The max output of combinations of good and services that can be produced through the full and efficient employment of of society’s economic resources.

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6
Q

Investment

A

The production of additional units of capital, increasing society’s total economic resources.

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7
Q

Specialisation

A

Productive activity by individuals, firms and countries focusing upon narrow range of output. -division of labour

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8
Q

Market

A

Where buyers and sellers come into contact and engage in trade.

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9
Q

Demand

A

The quantity of a product that a consumer is Williams and able to buy in a period of time

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10
Q

Supply

A

The quantity of a product a firm is willing and able to produce in a period of time

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11
Q

Income effect of a price change

A

The effect of on quantity demanded of a price change causing consumer real income to change.

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12
Q

Marginal utility

A

The additional utility enjoyed when a consumer increases quantity demanded by a single unit

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13
Q

Consumer surplus

A

The utility received by a customer over and above the price that has been paid for a product. When the consumer is willing and able to pay more than the marker price.

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14
Q

Giffen good

A

A product where the price and quantity demanded are positively related

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15
Q

Price mechanism

A

The dynamic whereby the market price rise and fall to eliminate excess demand and excess supply, an efficiently functioning price mechanism will move the markets equilibrium

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16
Q

Factors of production

A

Society’s economic resources, compromising land, labour, capital and enterprise