Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

Economics > Micro > Flashcards

Micro Flashcards

1
Q

Factors of Production

A

Resources used to produce goods/services

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

Capital (FoP)

A

Things which are used to make goods/services

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

Enterprise (FoP)

A

Is the willingness of people in firms to take risks + make a profit + organise land, labour, capital

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

Land (FoP)

A

Refers to natural resources such as oil, land itself + renewable and non-renewable

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

Labour (FoP)

A

Is the work done by humans in production

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

Production Possibility Frontier (PPF)

A

Shows the maximum potential output of a combination of two goods or services an economy can achieve when all its resources are fully and efficiently used, given the current level of technology

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

Economic growth

A

Is an increase in the production of goods/service in an economy (negative growth is a decrease in the production)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

Consumer goods

A

Goods which do not produce other goods + used by people to satisfy their wants and needs

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

Capital goods

A

Goods which are used to produce other goods/services

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

Positive Statements

A

Can be proven true and false + are objective statements

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

Normative Statements

A

Express opinions + cannot be proven true or false + are subjective statements

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

Specialisation

A

Occurs when an individual, firm, region or country concentrates on the production of a limited range of goods/services

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

Division of Labour

A

Is the specialisation of workers on specific tasks in the production process

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

Functions of Money

A

1) Medium of exchange: commonly accepted in exchange for goods/services
2) Measure of value: the price of a good reveals its value
3) Store of value: value is maintained + can be kept for a long time
4) Method of deferred payment: allows debt to be created

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

Planning

A

Refers to the process by which a government allocates resources + funded through taxation

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

Price Mechanism

A

The means by which decisions of consumers + businesses interact to determine the allocation of resources

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

Command economy

A

An economy in which resources are allocated solely by the state (government)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

Mixed economy

A

An economy in which resources are allocated by the state + the price mechanism

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

Free market economy

A

An economy in which resources are allocated solely by the price mechanism

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

Public sector

A

The part of an economy which is controlled or owned by the government

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

Private sector

A

The part of an economy which is not controlled or owned by the government + by individuals or groups of individuals

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

Utility

A

The satisfaction or benefit derived from consuming a good

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

Habitual Behaviour

A

Something that becomes a habit

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
24
Q

Consumer Inertia

A

Fear of the unknown + don’t know what to expect

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
25
Q

Bounded rationality

A

Individuals wish to maximise utility but are unable to do so due to a lack of time, information, ability to process information

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
26
Q

Demand

A

Is the quantity of a good or service purchased at a given price over a given period of time

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
27
Q

Substitute goods

A

Are two alternative products that can be used for the same purpose

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
28
Q

Complement goods

A

Are products that are used together

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
29
Q

Supply

A

Is the quantity of a good or service that firms are willing to sell at a given price in a given period of time

30
Q

Revenue

A

The income that a government or company receives + price x quantity

31
Q

Opportunity cost

A

Is the value of the next best alternative forgone

32
Q

Excess demand

A

Shortage - occurs when demand exceeds supply at a given price

33
Q

Excess supply

A

Glut - occurs when supply exceeds demand at a given price

34
Q

Equilibrium price

A

When the supply of goods matches demand

35
Q

Direct tax

A

A tax levied directly on an individual or organisation (tax on income, business profits)

36
Q

Indirect tax

A

A tax levied on a good/service

37
Q

Specific tax

A

Causes a parallel shift in the supply curve + the tax is the same fixed amount at all prices e.g. fuel duty, beer duty

38
Q

Ad Valorem tax

A

Causes a non-parallel shift in the supply curve + the tax increases as the amount sold rises e.g. VAT, import tariffs

39
Q

Price elasticity of demand (PED)

A

Measures the responsiveness of demand given a change in price

40
Q

Price elasticity of supply (PES)

A

Measures the responsiveness of supply given a change in price

41
Q

Factors affecting demand (6)

A

1) Population size
2) Changes in the prices of substitute + complement goods
3) Change in the age structure of the population
4) Change in income
5) Advertising
6) Changes to consumer taste/preference

42
Q

Factors affecting supply (6)

A

1) Weather conditions (agriculture factor)
2) Changes to production costs
3) Improvements to technology/innovation
4) No. of firms
5) Changes in prices of related goods
6) Firm expectations of future prices e.g. may hold back supply until price increases

43
Q

Determinants of PED (5)

A

1) No. of substitutes
2) Necessity/Luxury
3) Addictiveness
4) Time
5) Proportion of income spent on the product

44
Q

Determinants of price elasticity of supply (5)

A

1) Time required to produce the product
2) Level of spare production
3) No. of stocks/finished goods available
4) Time
5) Perishability of the product

45
Q

Consumer Surplus:

A

The extra amount of money consumers are prepared to pay for a good/service above what they actually pay + it is the utility or satisfaction gained from a good/service in excess of the amount paid for it

46
Q

Producer Surplus:

A

The extra amount of money paid to producers above what they are willing to accept to supply a good/service + it is the extra earning obtained by a producer above the minimum required for them to supply the good/service

47
Q

Income effect:

A

Assuming a fixed level of income, the income effect means that as the price falls the amount that consumers can afford increases + so demand increases

48
Q

Marginal utility

A

The utility or satisfaction obtained from consuming one extra unit of a good/service

49
Q

Diminishing Marginal Utility:

A

As successive units of a good are consumed, the marginal utility gained from each extra unit will fall

50
Q

Cross elasticity of demand (XED)

A

Measures the responsiveness of demand for one good to changes in the price of another good

51
Q

Income elasticity of demand (YED)

A

Measures the responsiveness of demand to changes in income

52
Q

Market failure

A

Is where too much or too little of a good is produced or consumed compared with the socially optimal level of output OR when the price mechanism leads to an inefficient allocation of resources

53
Q

External costs

A

A cost to a third party that is not involved in the making, buying, selling and consumption of a specific good/service (negative externality)

54
Q

External benefits

A

A benefit to a third party that is not involved in the making, buying, selling and consumption of a specific good/service (positive consumption)

55
Q

Non-rival

A

That consumption of a product does not prevent another person from also consuming that product e.g. radio programme, as if one person listens to the programme it doesn’t prevent another person from also listening to it. However, a radio itself is a rival good.

56
Q

Non-excludable

A

Means that once a good is provided, it is impossible to stop people from using it e.g. once a lighthouse is provided the ships cannot be prevented from benefitting from it

57
Q

Free-rider problem

A

Is a type of market failure that occurs because everybody is able to benefit from them

58
Q

Public goods

A

Goods that have the characteristics of non-rivalrous + non-excludability

59
Q

Regulation

A

Is a rule or law enacted by the gov that must be followed by economic agents + used to encourage a change in behaviour

60
Q

Minimum price

A

A price set ABOVE the market equilibrium price by the gov

61
Q

Maximum price

A

A price set BELOW the market equilibrium price by the gov

62
Q

Limit

A

A limit (cap) is set on the total amount of pollution (e.g. CO2) firms are allowed to emit over a period

63
Q

Government failure

A

When gov intervention designed to correct a market failure results in a less efficient allocation of resources

64
Q

Guaranteed minimum pricing scheme

A

Where the surplus output created is purchased by a gov agency at the minimum price + the main aim is to protect producers incomes

65
Q

Externalities

A

Are spill over effects from production and consumption for which no appropriate compensation is paid to one or more third parties affected
They can cause market failure if the price mechanism does not take account of the social costs + benefits of production and consumption

66
Q

Profit Cap

A
  • A limit on profits as a percentage of total revenue
  • Profit cap is usually introduced where supernormal profits are regarded as excessive
67
Q

Perfect information

A

When a buyer/seller has a complete understanding of the quality + nature of a good/service

68
Q

Symmetric information

A

When buyers/sellers have equal amounts of knowledge about a good/service

69
Q

Imperfect information

A

When a buyer/seller lacks a complete understanding of a quality + nature of a good/service

70
Q

Asymmetric information

A

When a buyer or seller has more info about a good/service than the other party

71
Q

Information gap

A

When either the buyer/seller doesn’t have access to the info for them to make a fully informed decision

72
Q

Irrational Behaviour

A

Happens when people make choices + decisions that go against the assumption of rational utility maximising behaviour

Economics (8 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions