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economics definitions > micro > Flashcards

micro Flashcards

1
Q

Allocative efficiency

A

Producing the mix of goods and services that society values the most.

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2
Q

Buffer stock

A

An intervention system that aims to stabilise prices

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3
Q

Capital

A

Productive resources

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4
Q

Ceteris Paribus

A

All other factors remaining constant

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5
Q

Composite demand

A

When a good is demanded for more than one distinct purpose

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6
Q

Cross elasticity of demand

A

When the responsiveness of quantity demanded of one good to the change in price of another good

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7
Q

Demand

A

The amount of product that consumers are willing and able to buy at each given price level

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8
Q

Demerit good

A

A good that would be over-consumed in a free market as it brings less overall benefit to the consumers than they realise.

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9
Q

Depreciation

A

The rate at which capital loses value over time.

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10
Q

Derived demand

A

When the demand for a product or factor of production comes from the demand for another product

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11
Q

Diseconomies of scale

A

Where an increase in the scale of production leads to an increase in average total costs for firms

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12
Q

Disequilibrium

A

When supply in a market does not meet the demand

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13
Q

Division of labour

A

Breaking the production process down into a sequence of tasks, with workers assigned to particular tasks

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14
Q

Economic goods

A

Goods that are scarce and therefore have an opportunity cost in consumption

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15
Q

Economic welfare

A

The benefit or satisfaction an individual gets from the allocation in average total costs for firms

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16
Q

Economies of scale

A

Where an increase in scale of production leads to a reduction in average total costs for firms

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17
Q

Effective demand

A

Demand backed up by the ability to pay for a good or service

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18
Q

Enterprise

A

The risk taking role of business owners in combining other factors of production

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19
Q

Equilibrium

A

The market situation where planned demand equals planned supply and there is no tendency for change

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20
Q

Excess demand

A

When the demand is greater than supply at a given price

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21
Q

Excess supply

A

When the supply is greater than demand at a given price

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22
Q

Externalities

A

Spill over effects to third parties of a market transaction

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23
Q

Factors of production

A

capital, enterprise, land, labour

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24
Q

Factor market

A

The market for a factor of production that makes other goods or services

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25
Q

fixed costs

A

Costs of production that do not vary with output

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26
Q

Free goods

A

Goods that have no opportunity costs in consumption

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27
Q

Free market economy

A

One in which there is very little government intervention in the allocation of resources

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28
Q

Free-rider problem

A

Where some consumers benefit from other consumers purchasing a good, especially in the case of public goods

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29
Q

Government failure

A

When government intervention to correct market failure does not improve the allocation of recourses

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30
Q

Incidence of tax

A

The proportion of tax passed on to the consumer

31
Q

Income elasticity of demand

A

The responsiveness of quantity demanded to a change in income

32
Q

Indirect tax

A

A tax on spending

33
Q

Inferior goods

A

Goods or services that will see a fall in demand when income increases

34
Q

Joint supply

A

When the productive of one good results in the production of another

35
Q

Market

A

A situation where buyers are in contact with sellers of a good or service

36
Q

Market failure

A

When the free market fails to achieve an efficient or equitable allocation of resources

37
Q

Maximum price

A

A price ceiling above which the price of a good or service is not allowed to increase

38
Q

Merit good

A

A good or service that would be under-consumed in a free market as individuals do not fully perceive the benefits from consumption

39
Q

Microeconomics

A

Study of individual markets

40
Q

Minimum price

A

A price floor below which the price of a good or service is not allowed to decrease

41
Q

Mixed economy

A

An economic system where resources are allocated by state planning and market forces

42
Q

Monopoly

A

A market structure dominated by a single seller of a good or service

43
Q

Negative externalities

A

Costs imposed on a third party not involved with consumption or the production of the good

44
Q

Normal good

A

A good or service that will see an increase in demand as income rises

45
Q

Normative statements

A

Opinions that require value judgements to be made

46
Q

Oligopoly

A

A market structure where a few large firms dominate

47
Q

Opportunity cost

A

The next best alternative given up when an economic decision is made

48
Q

Partial market failure

A

Where the free market provides a product but with a misallocation of resources

49
Q

Perfect competition

A

An extremely competitive market structure

50
Q

Pollution permit

A

A permit sold to firms by the government, allowing them to pollute up to a certain limit

51
Q

Positive externality

A

A beneficial spillover effect to third parties of a market transaction

52
Q

Positive statements

A

Statements that can be tested against data to be declared either true of false

53
Q

Price elasticity of demand

A

The responsiveness of quantity demanded to a change in price

54
Q

price elasticity of supply

A

The responsiveness of quantity supplied to a change in price

55
Q

Private good

A

A good that is both excludable and rival in consumption

56
Q

PPC?PPB

A

Production possibility curve/boundary- a diagram showing the maximum possible output that can be achieved given a fixed amount of resources.

57
Q

Production efficiency

A

When a firm operates at minimum average total costs

58
Q

Public good

A

A good that possesses the characteristics of non excludability and non- rivalry in consumption

59
Q

Quasi-public good

A

A good that has some of the characteristics of a public good, but is not completely non- excludable or non- rival

60
Q

Scarcity

A

The economic problem- when Society’s wants exceed the amount available of the factors of production

61
Q

Specialisation

A

The production of a limited range of goods by an individual factor of production, firm or country, in co-operation with others so that together a complete range of goods is produced

62
Q

Substitutes

A

Goods that can be used as alternatives to other goods, e.g butter and margarine

63
Q

Supply

A

The quantity of a product offered for sale by firms at a given price

64
Q

Variable costs

A

Costs of production that vary with output

65
Q

capital goods

A

Any tangible assets that an organization uses to produce goods or services such as office buildings, equipment and machinery. Consumer goods are the end result of this production process.

66
Q

rationing

A

Prices serve to ration scarce resources when demand in a market outstrips supply.

67
Q

signalling

A

Prices adjust to demonstrate where resources are required, and where they are not

68
Q

incentive

A

Through their choices consumers send information to producers about the changing nature of needs and wants

69
Q

price mechanism

A

The interaction of buyers and sellers in free markets enables goods, services, and resources to be allocated prices.

70
Q

income tax

A

tax levied directly on personal income

71
Q

profit

A

When total income or revenue of a firm is greater than total costs

72
Q

complement

A

A product generally consumed together with another e.g fish and chips

73
Q

productivity

A

A measure of efficiency, typically expressed as output per person per hour

economics definitions (11 decks)

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