Key Words Flashcards
Allocative efficiency
Achieved when it’s not possible to produce more of one good without producing less of another
Buffer stock
An intervention system that aims to limit the fluctuations of the price of a commodity
Commodity
A good that is traded but usually refers to raw materials that are traded in bulk (e.g. Tea/ iron ore..)
Competition
Market situation where there are a large number of buyers and sellers
Complementary products
Goods that are consumed together. Complementary goods have a negative cross elasticity of demand. E.g. Bread and butter
Complete market failure
Where a free market fails to provide a product at all (e.g. Public goods) - missing markets
Composite demand
A good that is demanded for more than one purpose so an in erase in demand for one purpose reduces the available supply for the other purpose- resulting in higher prices
Contraction in supply
When the amount offered for sale is reduced because the price level has fallen
Contractions in demand
Falls in the quantity demanded caused by rising prices
Demand
The total amount of goods/services that a consumer is willing and able to purchase at any given time period
Demerit good
A good that would be over consumed in a free market. The marginal social benefit is smaller than the private benefit
Supply
Total amount of goods/ services that a producer is willing and able to supply to a market at any given time period
