Key Words (Week 2) Flashcards
Submarkets
Smaller markets that make up a market
Normal good
Are those which people will demand more of if their real income increases. This means that a rise in real income causes the demand curve to shift to the right-people want to buy more of the good at each price level. (Eg dvds)
Inferior good
Those which people demand less of if their real income increases. This means that a rise in real income causes the demand curve to shift to the left- people demand less at each price level as they can afford better goods. (Eg cheap clothing)
Substitute goods
Alternatives to each other, they are in competitive demand
Complementary goods
Goods that are used together, they are in joint demand
Composite demand
When goods have more than one use
Derived demand
The demand for a good or a factor of production used in making another good or service
Giffen good
When cheap staple foods are consumed in greater quantity when their price rises
Veblen good
When certain luxury goods with status appeal are consumed in greater quantity when their price rises
The law of demand
When the price of a good rises, the quantity demanded will fall
A normal good
When an increase in income leads to an increase in demand
Inferior good
When an increase in income leads to a fall in demand
Economy
careful management of available resources.
Entrepreneurship
Managerial ability: drawing together the 4 inputs into the productive process
Productive efficiency
The possible maximum output combinations available for the given level of resources (shown on any point of the PPF)
