Words to definitions Flashcards
Productive efficiency
Lowest average cost level of output
Subsidy
Payments by the government which reduce the costs of production of goods or services
Cross elasticity of demand
Measure of the % change in the quantity demanded of one product in relation to % change in price of another product
Marginal private cost
The cost borne by the party involved in the activity due to the consumption of one extra unit
Factor of production
Economic resource used to produce goods and services
Scarce resources
Factors of production for which demand exceeds supply
Composite demand
Demand for a good that had multiple uses
External cost
Cost received by a third party
Price elasticity of supply
Responsiveness of supply following a change in price
% change in quantity demanded divided by % change in price
Market mechanism
Process which markets solve the problem by allocating scarce resources between competing uses
Merit good
A good (such as healthcare) which social benefits of consumption exceed private benefits
Demand
Quantity of good or services that consumers are willing to buy at a given price in a given amount of time
Supply
Quantity of good or service that firms are willing to sell at a given price in a given amount of time
Private good
A good that is excludable and non-rival
Public good
A good that is non-excludable and non-refundable
