theme 1 Flashcards
what is price elasticity of demand (PED)
measures how responsive demand is to price change.
calculation for PED
%change in quantity/ %change in price
what is income elasticity of demand (YED)
measure of responsiveness of demand to a change in income
what is demand
number of consumers willing and able to purchase a good/ service at a given price.
demand curves
shows quantity demanded for a good at any given price over a period of time.
- as price decreases, demand increases
- as price increases, demand decreases
what way does curve shift when demand increases
shifts outward (right)
what way does the curve shift when demand decreases
shifts inwards (left)
what is supply
number of goods/ services that producers are willing and able to supply at a given price
supply curve
representation of relationship between quantity supplied and price
what is equilibrium
state of equality/ balance between supply and demand
what is a shortage in the market
where quantity demanded exceeds the quantity supplied
what is a surplus in the market
quantity supplied exceeds quantity demanded
percentage change calculation
new-old / old x100
income elastic
changes in income = big demand change
income inelastic
changes in income = small demand change
PED greater than 1
elastic
PED less than 1
inelastic
PED equal to 1
unitary elasticity
what is protectionism
involves any attempt by a country to impose restrictions on trade of goods/ services
reasons for protectionism
protect domestic market from overseas competition(eg through tariffs)
protection of domestic jobs
what is a tariff
tax imposed onto imports into a country
what is a quota
limit on goods that can enter a country
what is a subsidy
financial support given to domestic producers eg. grants/ interest free loans by government
what is a common market
more integrated type of trading bloc where goods, labour and capital can move freely between member countries.
what is dumping
foreign producers sell goods below cost price in domestic market
what is a trade bloc
group of countries that have signed agreement to reduce/eliminate trade barriers.
what is import licensing
governments grant importers permission the right to import goods
what is technical barriers to trade
product labelling rules stringent sanitary standards
what is intellectual property laws
patents and copyright protection of domestic markets and ideas
BRICS countries
Brazil Russia India China South Africa
MINT countries
Mexico
indonesia
nigeria
turkey
what is globalisation
process of making world more inter-dependent
business going international
what is an emerging economy
economy in process of rapid growth
what is GDP
gross domestic product
measures size of economy
sum of everything a country produces
what is GDP per Capita
countries total GDP divided by population
what is HDI
human development index
-life expectancy, education and income of country
tracks countries progress
HDI limitations
doesn’t consider qualitative factors eg. cultural identity/ political freedoms
doesnt consider income distribution
