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Economics > Unit 1 Definitions > Flashcards

Unit 1 Definitions Flashcards

1
Q

Demand

A

The quantity of a good or service that consumers are willing and able to buy at given prices in a given period of time.

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2
Q

Supply

A

The quantity of a good firms are prepared to sell in a market at given prices in a given period of time

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3
Q

Macroeconomics

A

Examines the economy as a whole

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4
Q

Microeconomics

A

Examines individual consumers, firms and markets in an economy

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5
Q

Normative statement

A

An opinion that cannot be scientifically be tested

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6
Q

Positive statement

A

A statement that can be scientifically tested and possibly falsified

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7
Q

The economic problem

A

Limited amount of resources to the unlimited quantity of goods and services that people desire

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8
Q

Production possibility diagram

A

Shows different possible combinations of goods that can be produced using available resources

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9
Q

Consumer good

A

Eg food or an ipod, is used by consumers to meet their needs or wantd

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10
Q

Capital good

A

Eg machine, is used to produce other goods, including consumer goods

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11
Q

Technical progress

A

Improved methods of producing existing goods and enables completely new types of good to be produced

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12
Q

Opportunity cost

A

The cost of the next best alternative sacrificed

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13
Q

Finite resource

A

A resource eg oil which is scarce and runs out as it is used

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14
Q

Free good

A

Eg air- no costs of production and no scarcity

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15
Q

Renewable resource

A

Eg timber- that with careful management can be renewed as it is used

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16
Q

Production

A

A process, or set of processes, that converts inputs into outputs

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17
Q

Factors of production

A

Inputs into the production process, such as land, labour, capital and enterprise

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18
Q

Command economy

A

The planning mechanism allocates resources between competing uses

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19
Q

Market economy

A

Markets and prices allocate resources between competing uses

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20
Q

Market

A

A place where buyers and sellers meet

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21
Q

Capitalism

A

The means of production are privately owned

22
Q

Socialism

A

The means of production are socially owned

23
Q

Mixed economy

A

Contains both market and non-market sectors and a substantial public sector as well as a private sector

24
Q

Market demand

A

The quantity of a good or service that all the consumers in a market are willing and able to buy

25
Q

Ceteris paribus

A

Other things being equal

26
Q

Condition of demand

A

A determinant of demand, other than the good’s own price, that fixes the position of the demand curve

27
Q

Decrease in demand

A

Leftward shift of the demand curve

28
Q

Increase in demand

A

A rightward shift of the demand curve

29
Q

Inferior good

A

A good for which demand decreases as income rises

30
Q

Normal good

A

A good for which demand increases as income rises

31
Q

Composite demand

A

Demand for a good with more than one use

32
Q

Economics

A

The study of choice and decision making in the world with limited resources

33
Q

Derived demand

A

Demand for a good occurring when a good is necessary for the production of other goods

34
Q

Market supply

A

The quantity of a good or service that all the firms in a market are willing to sell

35
Q

Profit

A

The difference between total sales revenue and total costs of production

36
Q

Condition of supply

A

A determinant of supply, other than the good’s own price, that fixes the position of the supply curve

37
Q

Decrease in supply

A

A leftward shift of the supply curve

38
Q

Increase in supply

A

A rightward shift of the supply curve

39
Q

Ad valorem tax

A

A percentage expenditure tax such as VAT

40
Q

Expenditure tax

A

A tax levied by the government on spending by consumers. The firms selling the good pay the tax to the government, but consumers indirectly pay via the resulting price

41
Q

Unit/specific tax

A

A tax levied on a unit of a good, irrespective of the good’s price

42
Q

Subsidy

A

Money given by the government to firms to reduce the price and offset some of the costs of production.

43
Q

Joint supply

A

Supply occurring when production of one good leads also to the supply of a by-product

44
Q

Competitive market

A

A market in which the large number of buyers and sellers possess good market information and easily enter or leave the market

45
Q

Equilibrium

A

A state of rest or balance between opposing forces

46
Q

Market equilibrium

A

When planned demand equals planned supply in the market

47
Q

Excess supply

A

When firms wish to sell more than consumers wish to buy, with the price above equilibrium

48
Q

Market disequilibrium

A

When the market fails to clear. The market plans of consumers and firms are inconsistent with each other

49
Q

Excess demand

A

When consumers wish to buy more than firms wish to sell, with the price below the equilibrium price

50
Q

Incentive function of price

A

Prices create incentives for consumers and firms to behave in certain ways

51
Q

Rationing and or allocative function of price

A

Prices allocate scarce resources between competing uses

52
Q

Signalling function of price

A

Prices provide information to buyers and sellers

Economics (20 decks)

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