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Economics Micro Aqa > Key Words Chapter 1&2 > Flashcards

Key Words Chapter 1&2 Flashcards

1
Q

Market economy

A

Is when output and prices of goods and services are determined by the workings of supply and demand.

(Is an economic system where economic decisions and prices of goods and services are guided by the interactions of a country’s individual citizens and business)

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2
Q

Command/planned economy

A

Is a system where factors of production are publicly owned and economic activity is controlled by central authority.

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3
Q

Mixed economy

A

Is a system which has elements of a free market economy and of a command economy

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4
Q

Finite resources

A

A nonrenewable resource that becomes increasingly scarce.

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5
Q

Infinite resource

A

A renewable resource and can be a replenished as it is used.

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6
Q

Choice

A

Is the selecting of one alternative and deciding how to allocate resources.

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7
Q

Need

A

Something nessesary for human survivals

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8
Q

Want

A

Something desired but not nescessary for human survival.

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9
Q

Trade

A

The buying or selling of goods and services

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10
Q

Signalling function of prices

A

Is when prices are used to inform sellers and buyers effecting their economic decisions

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11
Q

Rationing function of prices

A

Is when prices increase to ration demand for goods

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12
Q

Scarcity

A

Is the tension between infinite wants and finite resources.

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13
Q

The fundamental economic problem

A

Is deciding how to best allocate resources to maximise overall welfare

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14
Q

Economic Welfare

A

Is the economic satisfaction/well-being of individuals or households in an economy

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15
Q

Imperfect information

A

Is when individuals lack the information to make the best decision

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16
Q

Normative statement

A

Is a statement based on opinion and includes a value judgment and is influenced by beliefs and morals.

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17
Q

Positive statement

A

Is one that is based on facts or can be tested

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18
Q

Opportunity cost

A

Is the next best alternative forgone due choices made

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19
Q

PPF

A

A curve that displays different combination of output of two goods or services that depend on the same finite resource

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20
Q

Incentive price function

A

Price creates and incentive for people to alter their economic transactions/ decisions.

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21
Q

Allocative efficiency/Pareto efficiency

A

Is when economic resources are utilised to produce a combination of goods and services that maximise economic welfare

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22
Q

Allocative price function

A

Is when price allocates resources away from markets with excess supply to markets with excess demand

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23
Q

Capital/ producer good

A

Goods used to produce other goods

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24
Q

Consumer good

A

Goods that are consumed by individuals and households used to satisfy their wants and needs.

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25
Q

Equilibrium

A

Supply = demand

26
Q

Equilibrium price

A

When planned supply matches planned demand

27
Q

Excess demand

A

Is when consumers are willing to buy more that what producers are willing to sell

28
Q

Excess supply

A

Is when sellers sell more than consumers are willing to buy

29
Q

Exchange

A

Trading objects of value using a median of exchange

30
Q

Income elasticity of demand (YED)

A

Measure of how responsive a good is in relation to change in consumer income

31
Q

Inferior good

A

Demand rises as income falls

32
Q

Joint supply

A

When one good is supplied another is also supplied from the same raw materials

33
Q

Normal good

A

As income rises demand rises

34
Q

Price elasticity of supply

A

A measure of how responsive a goods supply is to changes in price

35
Q

Producer sovereignty

A

Producers determine what is produced and the price changes

36
Q

Substitute good

A

A good which is in competing demands, and a good that can be used in place of a similar food

37
Q

Supply

A

The quantity of good or service a producer is willing and able to provide at a given price at a given time period.

38
Q

Elasticity

A

The proportionate responsiveness

39
Q

Effective demand

A

Desires for a good or service backed by the ability to pay for that said good or service.

40
Q

Disequilibrium

A

Excess supply or demand in the market

41
Q

Derived demand

A

Demand for a capital good that is results from an increased demand of a consumer good (aka lithium batteries for iPhones)

42
Q

Demand

A

The quantity of a good or service that a consumer is willing and able to buy at a given price at a given time.

43
Q

Cross elasticity of demand (XED)

A

A measure of how responsive the demand of a good is in response to a change in price of a different good.

44
Q

Consumer sovereignty

A

Consumers can collectively control production thorough exercising their spending power. This is strongest in a perfectly competitive market.

45
Q

Conditions of supply

A

A determinate of supply other than the price of the good/ service that sets the position of the supply curve

46
Q

Condition of demand

A

A determinate of demand for a good other than its price that sets the position of the demand curve.

47
Q

Composite demand

A

Demand for a multi-purpose good

48
Q

Complementary goods

A

Goods in joint demand and are often bought together

49
Q

Competitive markets

A

A market with a large number of buyers and sellers with low barriers to entry and exit

50
Q

Competing supply

A

When resources can be used to produce one good or another and not bother

51
Q

Individual demand

A

The quantity of good or service particular individual

52
Q

Veblen good

A

Goods where the high price is the attraction

53
Q

quality signalling goods

A

Goods where consumers take higher price as it indicated better quality

54
Q

Law of diminishing returns

A

Adding an additional factor of production results in a smaller increase in output in the short run

55
Q

Competing demand

A

Substitute goods when the price of one increases the demand for the other increase

56
Q

Elastic

A

Changes in price results to big changes in demand

57
Q

Unit (unitary) elasticity

A

A change in price leads to a corresponding change in demand

58
Q

Inelastic

A

Changes in price leads to a smaller or zero change in demand

59
Q

Market width

A

How widely a product can be defined

60
Q

Price mechanism/ market mechanism

A

When price is determined by the workings of supply and demand

Economics Micro Aqa (2 decks)

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