Next 15 Key Terms Flashcards
Disequilibrium
Internal or external forces prevent market equilibrium from being achieved
Factor endowment
Amount of land, labour, capital and enterprise that a country possess and can use for manufacturing.
Factor services
Services of the factors of production are bought and sold such as labour markets or market for raw materials.
Factors of production
Land - natural resources available
Labour - human input into the process
Capital - goods used in the supply of other products
Enterprise - entrepreneurs organise factors of production
Free market mechanism
The prices of goods and services are determined by the open market and consumers. There is no intervention from the government or any other organisations.
Free rider
A market failure; people take advantage of the services available without paying for it. For example people who don’t pay taxes use public goods.
Goods
Materials that satisfy human wants and provide utility.
Income elasticity of demand
The responsiveness of demand in relation to a change in consumer income.
Income inelastic goods
As peoples incomes increase or decrease, the demand for these goods doesn’t change as they’re essentials. For example food is income inelastic.
Income elastic goods
When the demand for goods is elastic in response to income. For example if income rises luxury goods will increase. demand for substitute goods will decrease and vice versa.
Inefficiency
An economy is not operating on the edge of it’s PPF, it’s not fully exploiting it’s scarce resources
Inferior goods
Quantity decreases when consumer income rises.
Land
Naturally occurring resources.
Human capital
The collective skills, knowledge or other intangible assets of individuals that can be used to create economic vale for the individuals, their employees or their community.
Imports
Purchases of goods or services by a domestic economy from a foreign economy.
