Paper 1 Key Terms Flashcards
Producer
A person, company or country that makes, grows or supplies goods and/or services
Factors of Production
The resources in an economy that can be used to make goods and services i.e. land, labour, capital and enterprise
Capital
Capital covers human-made aids to production such as machinery, tools, factory buildings and transport
Scarce resources
When there is an insufficient amount of something to satisfy all wants
Unlimited wants
The infinite desire for something
Economic problem
How to best use limited resources to satisfy the unlimited wants of people
Economic choice
An option for the use of selected scarce resources
Economic sustainability
The best use of resources in order to create responsible development or growth
Social sustainability
The impact of development or growth that promotes an improvement in quality of life for all
Environmental sustainability
The impact of development or growth where the effect on the environment is small and possible to manage
Market economy
An economy in which scarce resources are allocated by the market forces of supply and demand
Factor market
Market in which the services of the factors of production are bought and sold
Product market
Market in which final goods and services are offered to consumers, businesses and the public sector
Market demand
The total demand for a good or service, found by adding together all individual demands
Tax
A compulsory payment to the government
Elastic demand
When the percentage change in QD is greater than the percentage change in P
Inelastic demand
When the percentage change in QD is less that the percentage change in P
Efficiency
The optimal production and distribution of scarce resources
Allocation of resources
How scarce resources are distributed among producers, and how scarce goods and services are allocated among consumers
Market forces
Demand and supply factors that determine price levels and the availability of goods
Production
The total output of goods and services by a firm or industry in a period of time
Productivity
One measure of the degree of efficiency in the use of factors of production. Measured in terms of output per unit of input.
Labour market
Where workers sell their labour and employers buy the labour
Supply of labour
The total number of people willing and eligible to supply their labour
Pension
A fixed amount paid at regular intervals to a usually retired person
Medium of exchange
Anything that sets the standard or value of goods and services acceptable to all parties involved in a transaction
Financial sector
Consists of financial organisations and their products and involves the flow of capital
Investment
The purchase of capital goods that are used to produce future goods and services or an asset purchased to provide an income in the future and/or to be sold at a profit.
Building society
A mutual financial institution that is owned by its members. Its primary objectives are to receive deposits from its members and to lend money for members to purchase property
Insurance company
Financial institution that guarantees compensation for specified loss, damage or illness in return for an agreed premium
To increase PES
Increase capacity, keep stock levels high and train staff so they can switch easily between tasks
