Theme 1 Economics

Question 1

Market

Answer 1

A set of arrangements that allows transactions to take place

Question 2

Adverse selection

Answer 2

A situation in which a person at risk os more likely to take out insurance

Question 3

Allocative insurance

Answer 3

Achieved when society is producing appropriate amounts to fit consumer preferences

Question 4

Asymmetric information

Answer 4

When sine participants in a market have better information about the market than ithers

Question 5

Command economy

Answer 5

Sm economy in which decisions on resource allocation are guided by the state

Question 6

Comparative static analytics

Answer 6

Examining the effect on equilibrium after an external effect

Question 7

Competitive market

Answer 7

A market where an individual cannot influence the price bascule the firms are in competition with other firms

Question 8

Consumer surplus

Answer 8

The value that the consumer gains when consuming a good that is over the price paid

Question 9

Consumption externality

Answer 9

An externality that affects the consumption side of market which may be positive or negative

Question 10

XED

Answer 10

a measure if sensitivity demanded of a good or service to a change of price of another good

Question 11

Diminishing marginal utility

Answer 11

Describes the situation where an individual gains less additional utility from consuming a product the more of it is consumed

Question 12

Free rider problem

Answer 12

When an individual cannot be excluded from consuming a good and thus has no incentive to pay for its provision

Question 13

incidence of tax

Answer 13

The way in which the burden of paying a sales tax is divided between buyers and sellers

Question 14

Internalizing an externality

Answer 14

An attempt to deal with an externality by bringing an external cost or benefit into the price system

Question 15

Marginal analysis

Answer 15

An approach to economic decision based on considering the additional marginal benefits and costs of a change in behavior

Question 16

Marginal cost

Answer 16

The cost of producing an additional unit of output

Question 17

Marginal social benefit

Answer 17

The additional benefit that society gains from consuming an extra unit of goof

Question 18

Marginal social cost

Answer 18

The cost to society of producing an extra unit of good

Question 19

Market economy

Answer 19

An economy in which market force are allowed to guide allocation of resources

Question 20

Market failures

Answer 20

A situation in which the free market mechanism does not reach optimal allocation of resources where there is divergence between social benefit and cist

Question 21

Mixed economy

Answer 21

An economy which resources are allocated by produce signals and intervention by the state

Question 22

Moral hazard

Answer 22

Situation which a person who takes out insurance is more prone to ridk

Question 23

NMBY not in my backyard

Answer 23

Syndrome which people are happy to support construction of unsocial facility as long as it’d not in their own area

Question 24

Producer surplus

Answer 24

Difference between the price received by the firms for a good or service and the price at which they would have been prepared to supply that good or service

Question 25

Production externality

Answer 25

An externality that affects the production side of a market which may be positive or negative

Question 26

Social cost

Answer 26

Probate cost plus external cost

Question 27

Sustainable development

Answer 27

Development which meets needs of the present without compromising the ability of future generations to meet their own needs.