lol Flashcards
PASIFIC
Population Advertising Substitutes Income Fashion/Trends Interest rates Complements
PINTSWC
Productivity Indirect tax Number of firms in the market Technology Subsidies Weather Costs of production (wages, raw materials, etc)
What is a market
A place where buyers and sellers come to exchange goods and services
ARSI
allocates
Rations
Signals
Incentives
SPLAT
Substitutes Percentage of income Luxury Addictive Time period
EOIS
Elastic
Opposite
Inelastic
Same
PSSST
Production lag Stocks Spare capacity Substitutability Time period
YED
%ΔQd/%ΔY
XED
%ΔQdA/%ΔPB
PartySeasonNearChristmas
PositiveSub-NegativeComp
Externality flow
1) What moves: Production -> costs Consumption -> benefit 2)Which way: -ve -> left \+ve -> right 3) moving curve is always social
MERIT
- Underconsumed
- Missing information regarding the private benefit
- Have positive externalities
DEMERIT
- Over Consumed
- Missing information regarding the private costs
- has negative externalities
Public
non-excludable
non-rival
Economic problem
How to allocate resources amongst alternative uses. What to produce, for whom and how..
Scarcity
The situation where there are unlimited wants but finite resources.
Opportunity cost
the value of the next best alternative forgone when making a choice
4 FoP
Capital
Enterprise
land
labour
Specialisation
The concentration of a worker, firm, region or country to produce a narrow ranges of goods/services
Division of labour
The specialisation of labour where the production process is broken down into separate takes
Advantages of division of labour
- More efficient workers
- More goods can be produced than before
- Leading to higher skills thus can demand higher wages
Disadvantages of labour
- Lack of flexibility of workers hence boredom
- Over specialising thus workers may be unable to switch to other jobs
Advantages of specialisation
- Increase in world output
- Increase in widening range of goods available
- Possible increased trade between developed and developing countries could increase the world equality
- Competition between firms means they must be efficient to survive
Disadvantages of specialisation
- Adverse weather effects
- Reduced flexibility
- Trends/fashion
- Relies on finite resources
- may entail purchasing of tech and capital to replace humans as workers thus unemployment
Define PPC
Shows the maximum potential output of two goods that can be produced in the current time period if all goods are efficiently employed
Consumer surplus
The difference between what consumers are willing to pay and the price they actually pay (they’re benefit)
Producer surplus
The difference between what consumers are willing to sell for and the price they actually sell for
(they’re benefit
Allocative efficiency
Where customer satisfaction is maximised (where P=MC) or =S=D
Productive efficiency
Where production takes place using the least amount of scare resource for maximum output (bottom of AC curve
Externalities
Costs to 3rd party not involved in a transaction or consumption of a good
Negative externalities
Where the social costs of an activity are greater than the private costs
Positive externalities
Where the social benefits are greater than the private benefits
market failure
where the free market mechanism fails to achieve economic effiency
FORs of tradable permits
- Market based s
