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AS Micro Definitions > TERM 1 Definitions > Flashcards

TERM 1 Definitions Flashcards

1
Q

Scarcity

A

A situation that arises because people have unlimited wants in the face of limited resources

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2
Q

Economic goods

A

Goods that are scarce

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3
Q

Free goods

A

Not regarded as being scarce, such as air

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4
Q

Basic economic problem

A

Must choose how best to use their limited resources because not all needs and wants can be satisfied

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5
Q

Rationality

A

Economic agents acting on their best interests

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6
Q

Utility

A

The benefit derived from the consumption of a good or service

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7
Q

Resource allocation

A

The way in which a societies productive assets are deployed across alternative uses

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8
Q

Market economy

A

Market forces are allowed to guide allocation within a society

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9
Q

Centrally planned economy

A

The government guides resources allocated within society

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10
Q

Mixed economy

A

Combinations of government and market forces

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11
Q

Invisible hand

A

The way resources are allocated in a market economy

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12
Q

Positive statement

A

A statement about what is

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13
Q

Normative statement

A

Involves a value judgement about what ought to be

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14
Q

Value statement

A

Based on your opinion of beliefs rather than on facts

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15
Q

Factors of production

A

Land
Labour
Capital
Enterprise

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16
Q

The reward for:

A

Land ~ rent
Labour ~ Wages
Capital ~ Interest
Enterprise ~ Profit

17
Q

Joint Demand

A

Goods that are interdependent

18
Q

Composite demand

A

Demand for a good with multiple uses

19
Q

Competitive demand

A

Demand for goods in competition

20
Q

Law of demand

A

Inverse relationship between quantity and price

21
Q

Trade off

A

A situation in which the choice of one alternative requires the sacrifice of another

22
Q

Opportunity cost

A

Value of the next best alternative forgone

23
Q

Capital goods & Consumer goods

A

Capital ~ part of the production process
Consumer ~ Goods produced for present use

24
Q

Specialisation

A

The process of concentrating on a task or activity in order to become expert in it

25
Q

Barter system

A

A economy without money so it relys on exchange

26
Q

Consumer surplus

A

The value a consumer gains from consuming a good or service over and above the price they paid

27
Q

Producer surplus

A

The difference between the price received by firms and the price they were prepared to supply at

28
Q

Extension & Contraction

A

Movement ~>
Movement <~

29
Q

Complements & substitutes

A

Consume jointly
Priced rise together

30
Q

Normal & inferior goods

A

N~~QD ^ with a ^ in consumer income
I~~QD falls with a ^ in consumer income

AS Micro Definitions (4 decks)

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