Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

Economics Theme 1 > Theme 1 Economics > Flashcards

Theme 1 Economics Flashcards

theme 1

1
Q

External cost/benefit

A

The cost/ benefit to a third party not involved in the economic activity; the difference between social cost/benefit and private cost/benefit

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

Free market

A

An economy where the market mechanism allocates resources so consumers and producers make decision about what is produced, how to produce and for whom

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

Free rider principle

A

People who do not pay for a public good still receive benefits from it so the private sector will under-provide the good as they cannot make a profit

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

Government failure

A

When government intervention leads to a net welfare loss in society

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

Habitual behaviour

A

A cause of irrational behaviour; when consumers are in the habit of making certain decisions

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

Incidence of tax

A

The tax burden on the the tax payer

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

Income elasticity of demand (YED)

A

The responsiveness of demand to a change in income

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

Indirect tax

A

Taxes levied on goods and services which increase production and leads to a fall in supply, although this is often partially, or fully, passed onto consumers

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

Inferior goods

A

YED<); goods which see a fall in demand as income increases

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

Information gaps

A

When an economic agent lacks the information needs to make a rational informed decision

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

Labour

A

One of the four factors of production; human capital

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

Land

A

One of the four factors of production; natural resources such as oil, coal, wheat, physical space

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

Luxury goods

A

YED>1; an increase in incomes causes an even bigger increase in demand

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

Market failure

A

When the free market fails to allocate resources to the best interest of society, so there is an inefficient allocation of scarce resources

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

Market forces

A

Forces in free markets which act to reduce prices when there is excess supply and increase them when there is excess demand

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

Minimum price

A

A floor price which a firm cannot charge belwo

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

Model

A

A hypothesis which can be proven or tested by evidence; it tends to be mathematical whilst a theory is in words

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

Negative externalities of production

A

Where the social costs of producing a good are greater than the private costs of producing the good

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

Non- excludability

A

A characteristic of public goods; someone cannot be prevented from using a good

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

Non-renewable resources

A

Resources which cannot be readily replenished or replaced at a level equal to consumption; the stock level decreases over time as they are consumed

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

Non rivalry

A

A characteristic of public goods; one person’s use of the good does not prevent someone else using it

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

Normal goods

A

YED>0; demand increase as income increases

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

Normative statements

A

Subjective statements based on value judgments and opinions; cannot be proven or disproven

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
24
Q

Opportunity cost

A

The value of the next best alternative forgone

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
25
Q

perfectly price elastic good

A

PED/PED = Infinity; quantity demanded/supplied falls to 0 when price changes

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
26
Q

Perfectly price inelastic good

A

PED/PES = 0; quantity demanded/supplied does not change when price changes

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
27
Q

Positive externalities of consumption

A

Where the social benefits of consuming a good are larger than the private benefits of consuming that good

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
28
Q

Positive statements

A

Objective statements which can be proven tested with factual evidence to be proven or disproven

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
29
Q

Possibility production frontier (PPF)

A

Depicts the maximum productive potential of an economy, using a combination of two goods or services

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
30
Q

Price elasticity of demand

A

The responsiveness of demand to a change in price

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
31
Q

Price elasticity of supply

A

The responsive of supply to a change in price

32
Q

Price mechanism

A

The system of resource allocation based on the free market movement of prices, determined by the demand and supply curves

33
Q

Private cost/benefit

A

The cost/benefit to the individual participating in the economic activity

34
Q

Private goods

A

Goods that are rivalrous and excludable

35
Q

Producer surplus

A

the difference between the price the producer is willing to charge and the price they actually charge

36
Q

Public good

A

Goods that are non-excludable, nor rivalrous, non resectable and have zero marginal cost

37
Q

Rationality

A

Decision-making that leads to economic agents maximising their utility

38
Q

Regulation

A

Laws to address market failure and promote competition between firms

39
Q

Relatively price elastic good

A

When PED/PES>1; demand/supply is relatively responsive to a change in price so a small change in price leads to a large change in quantity demand/suppleid

40
Q

Relatively price inelastic good

A

When PED/PES<1; demand/supply is relatively unresponsive to a change in price so a large change in price leads to a large change in quantity demand/supplied

41
Q

Renewable resources

A

Resources which can be replenished, so the stock of resources can be maintained over a period of time

42
Q

Scarcity

A

the shortage of resources in relation to the quantity of human wants

43
Q

Social cost/benefit

A

The cost of benefit to society as a whole due to the economic activity

44
Q

Social optimum position

A

Where social costs equals social benefits; the amount which should be produced/ consumed in order to maximise social welfare

45
Q

Social science

A

The study of societies and human behaviour

46
Q

Specialisation

A

The production of a limited range of goods by a company/country/individual so they aren’t self-sufficient and have to trade with others

47
Q

Specific tax

A

A tax imposed on a good where the value of the tax is dependent on the quantity that is bought

48
Q

State provision

A

When the government provides public goods or merit goods which re under provided in the free market

49
Q

Subsidy

A

Government payments to a producer to lower their costs of production and encourage them to produce more

50
Q

Substitutes

A

Positive XED; if good B becomes more expensive, demand for good A rises

51
Q

Supply

A

The ability and willingness to provide a particular good/service at a given price at a given moment in time

52
Q

Symmetric information

A

Where buyers and sellers both have access to the same information

53
Q

Trade pollution permits

A

Licenses which allow businesses to pollute up to a certain amount. The government controls the number of licenses and so can control the amount of pollution. Businesses are allowed to sell and buy the permits which means there may be incentive to reduce the amount they pollute

54
Q

Unitary price elastic good

A

When PED/PES= 1; a change in price leads to a change in output by the same proportion

55
Q

Utility

A

The satisfaction derived from consuming a good

56
Q

Weakness at computation

A

A cause of irrational behaviour; when consumers are bad at making calculations, estimating probabilities and working out future benefits/costs

57
Q

Ad valorem tax

A

An indirect tax imposed on a good where the value of the tax is dependent on the value of the good

58
Q

Asymmetric information

A

When one party has more information than the other, leading to market failure

59
Q

Capital

A

One of the four factors of production; goods which can be used in the production process

60
Q

Capital goods

A

Goods produced in order to aid production of consumer goods in the future

61
Q

Ceteris paribus

A

All other things remaining the same

62
Q

Command economy

A

All factors of production are allocated by the state, so they decide what, how and for whom to produce goods

63
Q

Complementary goods

A

Negative XED; if good B becomes more expensive, demand for good A falls

64
Q

Consumer goods

A

Goods bought and demanded by households and individuals

65
Q

Consumer surplus

A

The difference between the price the consumer is willing to pay and the price they actually pay

66
Q

Cross elasticity of demand (XED)

A

the responsiveness of demand for one good to change in the price of another goods

67
Q

Demand

A

The quantity of a good/service that consumers are able and willing to buy t a given price at a given moment in time

68
Q

Diminishing marginal utility

A

The extra benefit gained from consumption of a good generally declines as extra unties are consumed; explains why the demand curve is downward sloping

69
Q

Division of labour

A

When labour becomes specialised during production process so do a specific task in cooperation with other workers

70
Q

Economic problem

A

The problem of scarcity; wants are unlimited ; resources are finite so choices have to be made

71
Q

Efficiency

A

When resources are allocated optimally, so every consumer benefits and waste is minimised

72
Q

Enterprise

A

One of the four factors of ; the willingness and ability to take risks and combine the three other factors of production

73
Q

Equilibrium price/quantity

A

Where demand equals supply so there are no more market forces bringing about change to price or quantity sold

74
Q

Excess demand

A

When price is set too low so demand is greater than supply

75
Q

Excess supply

A

When price is set too high so supply is greater than demand

76
Q

Externalities

A

The cost of benefit a third party receives from an economic transaction outside to ht emirate mechanism

Economics Theme 1 (2 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions