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A Level Economics > Micro Definitions > Flashcards

Micro Definitions Flashcards

1
Q

Ceteris paribus

A

All things being equal; the assumption that, whilst the effects of a change in one variable are being investigated, all other variables are kept constant

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2
Q

Economic goods

A

Goods which are scarce because their use has an opportunity cost

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3
Q

Free goods

A

Goods which are unlimited in supply and therefore have no opportunity cost

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4
Q

Needs

A

The minimum which is necessary for a person to survive as a human being

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5
Q

Production possibility curve

A

A curve which shows the maximum potential level of output of one good given a level of output for all other goods in the economy

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6
Q

Capital productivity

A

Output per unit of capital employed

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7
Q

Fixed capital

A

Economic resources such as factories and hospitals which are used to transform working capital into goods and services

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8
Q

Human capital

A

The value of the productive potential of an individual or group of workers. It is made up of the skills, talents, education and training of an individual or group and represents the value of the future earnings and production

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9
Q

Labour productivity

A

Output per worker

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10
Q

Market

A

Any convenient set of arrangements by which buyers and sellers communicate to exchange goods and services

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11
Q

Non-renewable resources

A

Resources such as coal or oil which once exploited cannot be replaced

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12
Q

Non-sustainable resources

A

Resources which are being economically exploited in such a way that it is being reduced over time

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13
Q

Primary sector

A

Extractive and agricultural industries

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14
Q

Productivity

A

Output per unit of input employed

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15
Q

Profits

A

The reward to owners of a business. It’s he difference between a firm’s revenues and costs

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16
Q

Renewable resources

A

Resources, such as fish stocks or forests, which can be exploited over and over again because they have the potential to renew themselves

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17
Q

Secondary sector

A

Production of goods, mainly manufactured

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18
Q

Specialisation

A

A system of organisation where economic units such as households and nations are not self-sufficient but concentrate on producing certain goods and services and trading the surplus with others

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19
Q

Stakeholders

A

Groups of people who have an interest in a firm, such as shareholders, customers, suppliers, workers, the local community in which it operates and the government

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20
Q

Sustainable resources

A

Renewable resources which can be economically exploited in such a way that it will not diminish or run out

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21
Q

Tertiary sector

A

Production of services

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22
Q

Utility

A

The satisfaction derived from consuming a good

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23
Q

Welfare

A

The well being of an economic agent or group of economic agents

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24
Q

Working it circulation capital

A

Resources which are in the production system waiting to be transformed into goods or other material before being finally sold to the consumer

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25
Q

Base period

A

The period, such as a year or a month, with which all other values in a series are compared

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26
Q

Index number

A

An indicator showing the relative value of one number to another from a base of 100. It is often used to present an average of a number of statistics

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27
Q

Equilibrium

A

The pint where what is expected or planned is equal to what is realised it actually happens

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28
Q

Normative economics

A

The study and presentation of policy prescriptions involving value judgments about the way scarce resources are allocated

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29
Q

Normative statement

A

A statement which cannot be supported or refuted because it is a value judgement

30
Q

Positive statement

A

A statement which can be supported or refuted by evidence

31
Q

Command/planned economy

A

An economic system where government, through a planning process, allocates resources in society

32
Q

Economic system

A

A complex network of individuals, organisations and institutions and their social and legal interrelationships

33
Q

Free market economy

A

An economic system which resolves the basic economic problem through the market mechanism

34
Q

Mixed economy

A

An economy where both the free market mechanism and the government planning process allocate significant proportions of total resources

35
Q

Consumer surplus

A

The difference between how much buyers are prepared to pay for a good and what they actually pay

36
Q

Demand / effective demand

A

The quantity purchased of a good at any given price, given that other determinants of demand remain unchanged

37
Q

Producer surplus

A

The difference between the market price which firms receive and the price which they are prepared to supply

38
Q

Complement

A

A good which is purchased with other goods to satisfy a want

39
Q

Composite demand

A

When a good is demanded for two or more distinct uses

40
Q

Derived demand

A

When the demand for one good is the result of the demand for another good

41
Q

Joint demand

A

When tow or kore complements are bought together

42
Q

Joint supply

A

When two or more goods are produced together, so that a change in supple for one good will necessarily change the supply of the other goods

43
Q

Substitute

A

A good which can be replaced by another to satisfy a want

44
Q

Elastic demand

A

PED is greater than 1

45
Q

Inelastic demand

A

PED is less than 1

46
Q

Unitary elasticity

A

PED is 1

47
Q

Cross elasticity of demand

A

A measure of the responsiveness of quantity demanded of one good to a change in price of another good

48
Q

Giffen good

A

A special type of inferior good where demand increases when price increases

49
Q

Income effect

A

The impact on quantity demanded of a change in price due to a change in consumers’ real incomes which results from this change in price

50
Q

Inferior good

A

A good where demand falls when income rises

51
Q

Normal good

A

A good where demand increases when incomes rise

52
Q

Substitution effect

A

The impact on quantity demanded due to a change in price, assuming the consumers’ real income stay the same

53
Q

Ad valorem tax

A

Tax levied as a percentage of the value of a good

54
Q

Incidence tax

A

The tax burden on the taxpayer

55
Q

Specific or unit tax

A

Tax levied on volume

56
Q

Subsidy

A

A grant given which lowers the price of goods, usually designed to encourage production or consumption of a good

57
Q

But labour costs

A

Cost of employing labour per unit of output or production

58
Q

Allocative efficiency

A

Occurs when resources are distributed in a way that no consumers could be better off without other consumers becoming worse off

59
Q

Dynamic efficiency

A

Occurs when resources are allocated efficiently over time

60
Q

Market failure

A

When the free market price mechanism fails to achieve economic efficiency (allocative efficiency)

61
Q

Productive efficiency

A

Achieved when production is at its lowest average cost

62
Q

Static efficiency

A

Occurs when resources are allocated efficiently at a point in time

63
Q

Technical efficiency

A

Achieved when a given quantity of output is produced with the minimum number of inputs

64
Q

Spill over effect

A

The difference between social costs and benefits and private costs and benefits. If net social cost (social cost minus social benefit) is greater than net private cost (private cost minus private benefit), then a negative externality or external cost exists.

65
Q

Free rider

A

A person or organisation which receives benefits that others have paid for without making any contributions themselves

66
Q

Merit good

A

A good which is under provided by the market mechanism.

67
Q

Demerit good

A

A good which is over provided by the market mechanism

68
Q

Private good

A

A good where consumption by one person results in the good not being available for consumption by others

69
Q

Public good

A

A good where consumption by one person does not reduce the amount available for consumption by others and once provided all individuals benefit or suffer whether they wish to or not

70
Q

Quasi-public good

A

A good which may no possess perfectly the characteristics of being non-excludable but which is non-rival

A Level Economics (15 decks)

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