Paper 1 Flashcards
Definition of Opportunity Cost
Cost of the next best alternative given up when making a choice
Definition of Expenditure
Spending by a government
What is a PPC?
A line that shows the different combinations of 2 goods an economy can produce if all resources are used up.
Definition of capital goods
Those purchased by a firm and used to make other goods i.e tools
Definition of Consumer goods
those purchased by a household i.e food
Definition of Economic Growth
increase in level of output by a nation
Causes of economic growth (4 causes)
New technology
Improved efficiency
Education and training
New resources
Reasons consumers don’t always maximize their benefits (3 reasons)
- Can’t calculate the benefits of consuming a product
- Buying habits
- Influences of others behavior
Reasons why producers don’t always maximize profit (3 reasons)
- Behavior of people in the business as not all decisions are made by the owner
- Alternative business objectives ie customer care
- Some commercial enterprises operate as charities
Definition of demand
amount of a good people are willing and able to buy at a given price and time
Definition of supply
amount that producers are willing and able to offer at a given price and time
Definition of equilibrium price
price at which supply and demand are equal
What is a market clearing price
The equilibrium price as the amount supplied in the market= the amount demanded so all products are bought up by customers
Define total revenue
amount of money generated from a sale of a product (quantity x price)
Define PED
responsiveness of demand to a change in price
