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OCR Alevel Economics > Role of Markets > Flashcards

Role of Markets Flashcards

1
Q

Division of labour

A

Where the production process is broken down into stages and workers are assigned different tasks

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2
Q

Demand

A

The amount of goods and services consumers are willing and able to purchase at a given price in a given time

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3
Q

Supply

A

The quantity of goods and services producers are willing and able to produce at a given price in a given time

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4
Q

Speciilisation

A

Where an individual worker, firm, region, or country produces a limited range of goods or services

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5
Q

What is individual demand

A

the demand for a product by a consumer

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6
Q

What is market demand

A

the demand for a product by all consumers in a market

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7
Q

what is competitive demand

A

demand for goods that are in competition with each other

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8
Q

what is composite demand

A

demand for good that has multiple uses

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9
Q

what is joint demand

A

goods which are interdependent/ demanded together.

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10
Q

What is individual supply

A

supply for a product by one producer

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11
Q

what is market supply

A

supply for a product by all producers in a market

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12
Q

what is competitive supply

A

a firm can use its’ resources to produce more than one product

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13
Q

what is joint supply

A

when a firm produces more than one product together
what is competitive supply

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14
Q

What causes a shift in the demand curve

A

Population
Advertising
Substitute goods/ price
Income
Fashion trends
Interest rates
Complimentary goods/price

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15
Q

What causes a shift in the Supply curve

A

Productivity
Indirect tax
No. of firms
Technology
Subsidy
Weather
Cost of production

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16
Q

What is the law of demand

A

there is an inverse relationship between price and quantity demanded. As price increases Qd decreases

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17
Q

What is the law of supply

A

there is a direct relation between price and quantity supply

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18
Q

Advantages of Specialisation of labour

A

effeciency of the country increases
inflation decreases and consumers would benefit from a lower price
production would increase

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19
Q

disadvantages of Specialisation of labour

A

the sector that produces the goo that the country choses not to specialise in will be threatened and may collapse
a more diverse economy may be less efected by adverse shocks which only affect specific industries
Countris will become dependant on other countries to produce goods they aren’t specialised in

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20
Q

Advantages of Division of labour

A

more efficient as time spet on switching tasks is eliminated
practice makes perfect

21
Q

disadvantages of Division of labour

A

Can be boring and mistakes may occur due to monotony
may become experts and find they don’t have any other skills which can lead to high structural unemployment.

22
Q

Problem with the barter economy

A

‘double coincidence of wnats’ when both parties have what the other has.

23
Q

When is there an extention of the demand curve

A

when price falls from p1 to p2

24
Q

When is there a contraction of the demand curve

A

When price rises

25
Q

When is there an extention in a supply curve

A

price rises

26
Q

When is there a contraction in a supply curve

A

price falls

27
Q

What is consumer surplus

A

Area under the demand curve but above the price, where it is all the utility of all the consumers willing to pay above the price set

28
Q

What is producer surplus

A

Area above supply curve and below price level, the additional benefit producers recieve from selling their goods at a higher price

29
Q

What happens when at equillibrium, the shift in demand is greater than the shift in supply

A

quantity decreases

30
Q

What is cross elasticity of demand (XED)

A

The responsiveness, quality demanded of one good to the change in price of another good

31
Q

Equation for XED

A

%change in Qd of good A / %change in price of another good B

32
Q

According to XPED when are goods complimentary and when are they supplementary

A

Complementary when XPED is negative
Supplementary when XPED is positive

33
Q

Define income elasticity of demand

A

The measures the responsiveness of demand in percentage terms to a change in the real incomes of customers

34
Q

Equation for Income elasticity of demand

A

%change of quantity demanded/ %change of Y

35
Q

If YED>1 what is the good

A

Luxury good

36
Q

If YED<1 what is the good

A

Necessity

37
Q

What is price elasticity of supply

A

The responsiveness in changes in quantity supplied to changes in price

38
Q

Factors influencing price elasticity of supply

A

Production laga
Spare capacity
Stocks
Sustainability of FOP
Time period

39
Q

Define margin

A

Change in variable caused by an increase of 1 unit of another variable

40
Q

Define total utility

A

Overall benefit of consuming a good

41
Q

Define marginal utility

A

Benefit from consuming one extra unit of good

42
Q

When does market failure occur

A

When the price mechanism fails to work efficiently or to perform at all. There is a misallocation of resources in the economy. Either due to failing product or providing the wrong quantity

43
Q

When does completw market failure occur

A

When the market doesn’t exist

44
Q

What are characteristics of public goods

A

Non-excludability and non-rivalry

45
Q

Define non excludability

A

Consumption of a good cable be condined to those who have payed for it

46
Q

Define non rivalry

A

Consumption by one individual doesn’t reduce the availability of Goods for another individual

47
Q

Components of private good

A

Had rivalry and excludability

48
Q

Define quasi public goods

A

Goods that are either non excludable or non rival but not both

OCR Alevel Economics (7 decks)

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