Unit 1: Key Words

Question 1

define demand

Answer 1

the amount of people willing to pay a given price at a time

Question 2

what if the difference between monopoly and dominant monopoly

Answer 2

monopoly is a single supplier of a service or product

dominant monopoly is when a firm takes 40% + of the market shares

Question 3

define inflation

Answer 3

the increase of a price level in an economy

‘real’ = after inflation

Question 4

define unemployment

Answer 4

the amount of people willing and able to work that do not have jobs

Question 5

define microeconomics

Answer 5

small decisions made by an individual ie household or firm

Question 6

define macroeconomics

Answer 6

considers the performance of the economy as a whole

Question 7

normative economics

Answer 7

cannot be proven as it is a value judgement (opinion)

Question 8

positive economics

Answer 8

can be proven or disproven ie hypothesis

Question 9

deflation

Answer 9

a decrease of price level

Question 10

disinflation

Answer 10

when the speed of inflation decreases, however it is still occurring

Question 11

want

Answer 11

things that are not needed for survival

Question 12

needs

Answer 12

necessities that are important for survival

Question 13

durable consumer goods

Answer 13

can be reused

Question 14

endurable consumer goods

Answer 14

cannot be reused

Question 15

define land

Answer 15

natural resources

Question 16

define capital

Answer 16

man made things

Question 17

the fundamental economic problem

Answer 17

how to best make decisions about the allocation of scarce resources
amongst competing uses
improve & maximise human happiness and welfare

Question 18

scarcity

Answer 18

a situation that arises from the fact the people have unlimited wants
resources to meet these wants are limited

Question 19

opportunity cost

Answer 19

the cost of giving up the best alternative when a choice if made

Question 20

describe economic welfare

Answer 20

it is about human happiness.

the economic well being of an individual, group or economy

Question 21

production possibility frontier

Answer 21

a curve/line on a graph
shows various combinations of two products that can be produced
if all available resources are fully and efficiently employed

Question 22

factors of production

Answer 22

inputs into production process ie:
labour 
land 
capital
enterprise

Question 23

production

Answer 23

process

converts inputs into outputs

Question 24

capital good (aka producer good)

Answer 24

used in the production of other goods or services

Question 25

consumer good

Answer 25

a good that is consumed by individuals or households to satisfy needs and wants

Question 26

finite resource (aka non renewable)

Answer 26

scare
runs out after use
non renewable
(ie oil)

Question 27

renewable resource

Answer 27

with careful management can be reused ie timber

Question 28

economic growth

Answer 28

increase in the potential level of real output the economy can produce over time
`

Question 29

full employment

Answer 29

all who are willing and able to work are employed

= no unemployment

Question 30

unemployment

Answer 30

when there are people who are willing and able to work, that don’t

Question 31

choice

Answer 31

choosing between alternatives when deciding on to use scare resources

Question 32

resource allocation

Answer 32

process of using available factors of production to produce different goods and services

Question 33

productive efficiency

Answer 33

cannot produce more of one good without producing less on another
for a firm occurs) AV.TC = minimised

Question 34

allocative efficiency

Answer 34

the available economic resources are used to produce the combination of goods and services
best match society’s taste&preferences

Question 35

competitive demand

Answer 35

occurs in market
lots of buyers / sellers
good market info
easily leave / enter the market

Question 36

effective demand

Answer 36

desire for a good / service backed up by ability to pay

Question 37

market demand

Answer 37

quantity of good/ service
that all consumers (in market ) demand
at different market prices