S3 exam Flashcards
Supply
The amount of a good or a service firms or producers are willing to make and cell at different prices
Quantity supplied
The amount of a good or service producers are willing and able make and sell in a market
Market supply
The amount supplied by all the individual producers competing to supply the product
Rise in supply
Other products becoming less profitable An increase in resources Technical progress Increase in business optimism Government paying subsidies to producers Cutting taxes on profit Fall in costs of employment factors Season
Fall in supply
Other products becoming more profitable Rise in the costs of employing factors A fall in availability of resources A fall in business optimism Government withdrawing subsides Increasing taxes on profit
Injections
This is the category given to any spending in an economy that is not consumer spending
Invesments
This is the spending by firms, normally on capital good e.g machinery
Exports
The money spent by oversea firms and individuals on British goods
Government spending
The spending in the economy of the public sector, determined by government decisions
Leakages
This category is given to withdraws of money from the circular flow diagram
Savings
Money that consumers save from there income
Imports
The amount spent bu UK firms and individuals on foreign goods and services
Taxes
The amount of revenue collected from central and local governement
Demand
The willingness of a consumer to buy goods and services
Effective demand
Consumers must have enough money to buy goods and services they need and want
Quantity demanded
Amount of good and services consumers are willing and able to buy
Individual demand
The demand of one consumer
Market demand
The total demand for that product from all its consumers
Extension of demand
Demand rises with a fall in price
Contraction of demand
Demand contracts when price rises
Market demand curve
The relationship between quantity demanded and price
Ceteris paribus
All other factors remain unchanged
Normal good
The demand for a product tends to rise when incomes rise
Inferior food
The demand tends to fall while incomes rise
Disposiable income
The amount of income left to save or spend after deductions
Complementary good
When a good needs an accessories to go with it i.e TV and remote
Joint demand
Complementary goods that are worth the same
Substitutes
When a purchase can be replaced by a want of another good or service
Land
Natural resources
Labour
Human effort
Capital
Man made resources
Enterprise
The eneterpreuneuer who brings all the factors together
Rent
Reward for land
Wages
Reward for labour
Interest
Reward for capital
Profit
Reward for enterprise
Factors of production
Land, labour, capital, enterprise
What are resources not scareced called
Free goods
Consumption
Using up goods and services to satisfy our needs and wants
Consumer spending is called
Consumer expenditure
Capital goods
Man-made resources which help to produce goods and sevices e.g machines
Public goods
Goods for the benefit of public e.g street lamps
Merit goods
Goods and sevices which the government thinks will benifit the public e.g education, health care
Scarcity
Limited resources but unlimited resources
Opportunity cost
The sacrifice of the next best alternative choice e.g choosing a mars bar over a dairy milk; the oppetunity cost would be the dairy milk
What maximises economic welfare
Satisfying consumers needs and wants
Maket
Arrangements that brings together producers and consumers of a good or service so they can engage in exchange at certain price
Barter
Producers are willin to exchange other goods and sevices they want fo there owm
Demand
The want and wilingness of a consumer to buy goods and sevices
Criteris paribus
Meaning that all other factors remain unchanged
Rise in demand
Change in weather Increase in population Reduction in tax Change in fashion Increases in consumers income
Fall in demand
Change in weather Increase in tax rates Fall in population Change in fashion Increase tax on income
Disposable income
The amount of income people have to spend or save after taxes on their incomes have been deducted
Marginal utility
The satisfaction gained from consuming an extra unit of a good
Total utility
The total amount of satisfaction gained from consuming a product in a period of time
Diminishing marginal utility
The more we consume of a good, the less wea re willing to pay to get one more unit of it. This is because our satisfaction falls after consuming more than one unit
Substitution effect
As price rises or income decreases will replace more expensive items with less costly alternatives
Income effect
The change in consumers real income resulting a change in product prices meanin demand for a product also changes
Demand curve slope downwards
Law of diminishing marginal utility
Income effect
Subsitute effect
Value added
The difference between the market price paid fo a product by a consumer and the cost of the natural and man-made materials, complainants and resources to make it
Productivity
The amount of output that can be produced per unit of output in a certain time
Production efficiency
The maximum output for tha maximum cost and therefore maximising profit
Short run
The firm will have fixed capsity i.e at least one factor of production is fixed ad cant be expanded
Long run
The firm wil be able to vary all the factors of production
Total revenue
Total receipts from sales of a given quantity of goods or services
Price x quantity
Average revenue
The revenue generated per unit of output sold
Total revenue divided by quantity
Marginal utility
the additional revenue that will be generated by increasing product sales by one unit
Price
Cost
The payment by a firm in producing its outputs
Fixed costs
Any costs that in the short run don’t vary
Variable costs
Any costs that tend to vary directly with levels of output
Economic growth
This occurs when there is an increase in total output of goods and services over one year period of time using the same or fewer resources
How to measure economic growth
National income
National income
The value of all goods and services produced in the economy in a year
Gross demestic product (GDP)
This measures the goods and sevices that are produced in the UK no matter who owns the resources
Inflation
The rate at which the general level of prices for goods and sevices is rising and consequently the purchasing power of currency is falling
How to measure REAL NI
REAL NI = NI - inflation
Factors effecting living statdards
Employment Inflation Taxation Income Interest rates Health care Education Benifit level
Why do supply curves slope upwards
Higher profit per unit
New firms will enter the market
Ways of saving money
ISA,
Regular savings account
Ways of borrowing money
Credit cards
Hire purchase
Advantage of credit cards
More secure when there is problem with retailer
Disadvantage of credit cards
High interest rates
Advantage of bank loans
Low interest rates compared to credit cards
Disadvantage of bank loans
Pay back more than you borrowed
Factors that effect consumer confidence
Changes in governement borrowing
Exchange rate fluctuations
Consumer confidence
degree of optimism that consumers feel about the overall state of the economy and their personal financial situation
How can the governement improve economic growth
Providing subsidies to businesses, schools and hospitals to improve quality
More productivity of people and more jobs result in an increase of productivity which means more money is entering the circular flow
