micro (T1-T3) keywords

Question 1

allocative efficiency

Answer 1

when econ resources = used to produce g+s that maximise econ welfare

Question 2

allocative price function

Answer 2

prices allocated away from markets w excess supply to markets w excess demand

Question 3

capital / producer goods

Answer 3

goods used in the production of other goods

Question 4

consumer good

Answer 4

goods consumed by households to satisfy needs + wants

Question 5

factors of production

Answer 5

inputs of the production process –> land + labour + capital + enterprise

Question 6

finite resources

Answer 6

non-renewable resources that are becoming scarce

Question 7

fundamental economic prob

Answer 7

deciding how to allocate limited amount of resources w infinite wants

Question 8

normative statements

Answer 8

have value judgements + opinions that can’t be proved / tested

Question 9

positive statements

Answer 9

statements w facts that can easily be proved / tested

Question 10

opportunity cost

Answer 10

the next best alternative forgone when making a choice

Question 11

production possibility frontier

Answer 11

curve that shows possible combinations of 2 products that can be produced w finite resources

Question 12

competing supply

Answer 12

resources = used to produce 1 good or another (not both)

Question 13

competitive market

Answer 13

many buyers + sellers & low barriers to enter + exit

Question 14

complementary goods

Answer 14

• in joint demand
• often bought together
• like airpods + iphones

Question 15

incentive price function

Answer 15

price creates incentives for people to adjust their economic transactions

Question 16

customer sovereignty

Answer 16

consumers = govern production in markets via exercising spending power

Question 17

demand

Answer 17

consumer = willing + able to buy @ a given price + time

Question 18

effective demand

Answer 18

‘demand’ that’s backed by the ability to pay for the g/s

Question 19

disequilibrium

Answer 19

excess demand // supply

Question 20

joint supply

Answer 20

change in supply of 1 good impacts the supply of another

when 1 good = produced, another is as well from the same raw materials

Question 21

joint demand

Answer 21

D for 1 product = directly related to market for a related g/s

Question 22

composite demand

Answer 22

good used to make more than 1 type of product

Question 23

derived demand

Answer 23

demand for good that’s the input for another good

Question 24

elasticity

Answer 24

the proportionate responsiveness of a 2nd variable to a change in the 1st variable

Question 25

excess demand

Answer 25

consumers want more than producers are willing to sell (bottom bit on graph)

Question 26

excess supply

Answer 26

producers want to sell more than what consumers are willing to buy (top bit of graph)

Question 27

PED

Answer 27

measured the responsiveness of demand after a change in price

Question 28

YED

Answer 28

measures the responsiveness of a good’s demand to a change in consumers’ income

Question 29

XED

Answer 29

measures the responsiveness of 1 good’s demand to a change in the price of another good

Question 30

price elasticity of supply

Answer 30

measures the responsiveness of a good’s supply to a change in price

Question 31

substitute goods

Answer 31

• in competing demand –> good that can be used in place of another similar good
• has a +XED (competing demand)

Question 32

supply

Answer 32

the quantity of a g/s that a producer = willing + able to sell @ a given price + time

Question 33

average costs

Answer 33

‘total production costs’ / ‘total output’

Question 34

profit

Answer 34

‘total revenue’ - ‘total costs’

Question 35

avg revenue

Answer 35

‘total revenue’ / ‘total output’

Question 36

total cost

Answer 36

‘total fixed costs’ + ‘total variable costs’

Question 37

total revenue

Answer 37

‘price of each good’ x quantity sold

↳ the total amount of income from the sales of goods / services that are related to the company’s primary operations

Question 38

diseconomies of scale

Answer 38

when long-run avg costs increase as output rise

Question 39

economy of scale

Answer 39

when long-run avg costs decrease as output rises

Question 40

external economy of scale

Answer 40

firms saving due to growth of the industry the firm is a part of

Question 41

internal economy of scale

Answer 41

firms saving due to the actual firm’s growth

↳ a fall in average costs & a rise in input due to the growth of the firm

Question 42

division of labour

Answer 42

diff workers performing diff tasks in a good’s / service’s production - limited specialisation

Question 43

fixed costs

Answer 43

costs of production that don’t vary w output

Question 44

variable costs

Answer 44

costs from paying variable factors (amount of raw materials needed –> not constant)

Question 45

specialisation

Answer 45

worker only performing a specific task // small range of tasks –> efficient

Question 46

short run

Answer 46

time where at least 1 of the FOP = fixed and cannot be varied

Question 47

long run

Answer 47

time where non of the FOP are fixed and can be varied

Question 48

long run avg costs

Answer 48

long run cost per unit of output

Question 49

long run production

Question 50

production

Answer 50

set of processes that converts inputs into outputs

Question 51

productive efficiency

Answer 51

minimised avg total costs

Question 52

productivity

Answer 52

output per unit of input