Microeconomic terms Michaelmas 2024 Flashcards
Capital goods (Producer goods)
A good which is used in the production of other goods or services.
Command economy (Planned economy)
An economy in which government officials or planners allocate economic resources to firms and other productive enterprises.
Mixed economy
An economy that contains both a large market sector and a large non-market sector in which the planning mechanism operates.
Market economy
An economy in which goods and services are purchased through the price mechanism in a system of markets.
Consumer surplus
A measure of the economic welfare enjoyed by consumers: surplus utility received over and above the price paid for a good.
Producer surplus
A measure of the economic welfare enjoyed by firms or producers: the difference between the price a firm succeeds in charging and the minimum price it would be prepared to accept.
Scarcity
It results from the fact that people have unlimited wants but resources to meet these wants are limited. In essence, people would like to consumer more goods and services than the economy is able to produce with limited resources.
Derived demand
Demand for a good or factor of production is wanted not for its own sake, but as a consequence of the demand for something else.
Composite demand
Demand for a good which has more than one use, which means that an increase in demand for one use of the good reduces the supply of the good for an alternative use. It is related to the concept of competing supply.
Joint supply
When one good is produced, another good is also produced from the same raw materials, perhaps as a by-product.
Market equilibrium
When planned demand equals planned supply in the market. Where the demand curve crosses the supply curve.
Factors of production
Inputs into the production process [e.g. land, labour, capital enterprise].
Demand
The quantity of a good or service that consumers are willing and able to buy at given prices, in a given period of time.
Supply
The quantity of a good or service that producers are willing and able to sell at given prices, in a given period of time.
Productive efficiency
For the economy as a whole occurs when it is impossible to produce more of one good without producing less of another. For a firm it occurs when the average total cost of production is minimised.
