Brainscape's Knowledge GenomeTM

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


See full index

Micro Economics > year 12 definitions > Flashcards

year 12 definitions Flashcards

1
Q

Ad Valorem Tax

A

A tax levied on a commodity set as a percentage of selling price

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

Adverse Selection

A

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

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

Allocative Efficiency

A

Achieved when consumer satisfaction is maximised

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

Asymmetric Information

A

A situation in which some participants in a market have better information about the market than others

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

Average Total Cost

A

Total cost divided by quantity produced

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

Buffer Stock

A

A scheme intended to stabilise the price of a commodity by buying excess supply in periods when supply is high, and selling this stock when supply is low

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

Capitalism

A

A system of production in which there is private ownership of productive resources, and individuals are free to pursue their objectives with minimal government interference

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

Centrally Planned Economy

A

Decisions on resource allocation are guided by the state

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

Ceteris Paribus

A

A Latin phrase meaning ‘other things being equal’. It is used in economics when we focus on change in one variable while holding other influences constant

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

Comparative Static Analysis

A

Examines the effect on equilibrium of a change in the external conditions affecting a market

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

Competitive Demand

A

Demand for goods that are in competition with each other

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

Competitive Market

A

A market in which individual firms cannot influence the price they are selling because of competition from other firms

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

Competitive Supply

A

A situation in which a firm can use its factors of production to produce alternative products

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

Complements

A

Two goods are said to be complements if people tend to consume them jointly, so that an increase in the price of one good causes the demand of the other good to fall

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

Composite Demand

A

Demand for a good that has multiple uses

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

Composite Supply

A

Where a product produced by a firm serves multiple markets

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

Consumer Surplus

A

The value that consumers gain from consuming a good or service over and above the price paid

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

Consumption Externality

A

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

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

Cost Efficiency

A

Appropriate combination of inputs of factors of production, given relative prices of those factors

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

Cross elasticity of demand (XED)

A

measure of sensitivity of quantity demanded on one good/service to a change in price of another
%change in quanity demanded good A divided by %change price of good A

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

Demand

A

Quantity of a good or service that consumers are willing and able to buy at any possible price in a given period

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

Demand Curve

A

A graph showing how much of a good or service will be demanded by consumers at a given price

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

Demerit good

A

A good that brings less benefit to consumers than they expect, such that too much will be consumed by individuals in a given market

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

Derived Demand

A

Demand for a factor of production or a good which derives not from the factor or the good itself but from the good it produces

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

Division of Labour

A

A process whereby the production procedure is broken down into a sequence of stages, and workers are assigned to particular stages

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

Economic Efficiency

A

A situation in which both productive efficiency and allocative efficiency have been reached

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

Economic Growth

A

An expansion in productive capacity of the economy

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

Externality

A

A cost or benefit that is external to market transaction, and thus not reflected in market prices

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

Factors of Production

A

Resources used in the production process; inputs into production, including labour, capital, land and entrepreneurship

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

Firm

A

An organisation that bring together factors of production in order to produce output

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

Fixed Costs

A

Costs incurred by a firm that do not vary with output level

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
32
Q

Free Market Economy

A

One in which resource allocation is guided by market forces, without intervention from the state

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
33
Q

Free-rider problem

A

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

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
34
Q

Government Failure

A

A misallocation of resources arising from government intervention

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
35
Q

Gross Domestic Product

A

A measure of economic activity carried out in an economy during a period

36
Q

Incidence of Tax

A

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

37
Q

Income elasticity of demand (YED)

A

measure of the sensitivity of quantity demanded to a change in consumers income
%change quantity demanded divided by %change real income

38
Q

Indirect Tax

A

A tax levied on expenditure on goods and services (as opposed to a direct tax which is charged directly to an individual based on income)

39
Q

Inferior Good

A

one where the quantity demanded decreases in response to an increase in consumer income

40
Q

Internalising an economy

A

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

41
Q

Invisible Hand

A

Term used by Adam Smith to describe the way resources are allocated in a market economy

42
Q

Joint Demand

A

Demand for goods which are interdependent, such that they are demanded together

43
Q

Joint supply

A

Where a firm produces more than one product together

44
Q

Law of Demand

A

A law that states there is an inverse relationship between quantity demanded and the price of a good or service, ceteris paribus

45
Q

Macroeconomics

A

The study of the interrelationship between economic variables at an aggregate (economy wide) level

46
Q

Marginal Cost

A

The cost of producing an additional unit of output

47
Q

Marginal Social Benefit

A

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

48
Q

Marginal Social Cost

A

The additional cost to society of producing an extra unit of a good

49
Q

Market

A

A set of arrangements that allow transactions to take place

50
Q

Market economy

A

Market forces are allowed to guide the allocation of resources within an economy

51
Q

Market equilibrium

A

A situation that occurs in a market where the price is such that quantity that consumers wish to buy is exactly balanced by the quantity firms wish to sell

52
Q

Market failure

A

A situation in which the free market mechanism does not lead to optimal allocation of resources. eg there is a divergence between marginal social cost and marginal social benefit

53
Q

Merit good

A

A good that brings unanticipated benefits to consumers, such that it will be under consumed in a free market

54
Q

Microeconomics

A

The study of economic decisions taken by individual economic agents such as households and firms

55
Q

Minimum wages

A

A system designed to protect the low paid by setting a minimum wage that employers are permitted to offer

56
Q

Mixed economy

A

Resources are allocated partly through price signals and partly through government direction

57
Q

Model

A

A simplified representation of reality used to provide insight into economic decisions and events

58
Q

Moral hazard

A

A situation in which a person who has taken out insurance is prone to taking more risk

59
Q

Normal good

A

One where the quantity demanded increases in response to an increase in consumer income

60
Q

Normative statement

A

A statement involving a value judgement that is about what ought to be

61
Q

Opportunity cost

A

In decision making, the value of next best alternative forgone

62
Q

Pareto Optimum

A

An allocation of resources is said to be pareto optimum if no reallocation of resources can make an individual better off without making other individuals worse off

63
Q

Positive statement

A

A statement that is about what is, facts

64
Q

Price elasticity of demand (PED)

A

A measure of the sensitivity of quantity demanded to a change in the price of a good or service
%change in quantity demanded divided by %change in price

65
Q

Price elasticity of supply (PES)

A

A measure of the sensitivity of quantity supplied of a good or service to a change in the price of that good or service
%change in quantity supplied divided by %change in price

66
Q

Private cost

A

A cost incurred by an individual (firm or consumer) as part of its production or other economic activities

67
Q

Private good

A

A good that, once consumed by one person, cannot be consumed by somebody else. Such a good has excludability and is rivalrous

68
Q

Producer surplus

A

The difference in the price received by firms and the price at which they would be willing to supply

69
Q

Production externality

A

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

70
Q

Production possibility curve

A

A curve showing the maximum combinations of goods or services that can be produced in a set period of time given available resources

71
Q

Productive efficiency

A

Attained when a firm operates at minimum average total cost, choosing an appropriate combination of inputs (cost efficiency) and producing maximum possible output from those inputs (technical efficiency_

72
Q

Prohibition

A

An attempt to prevent the consumption of a demerit good by declaring it illegal

73
Q

Public good

A

A good that is non-exclusive and non-rivalrous. Consumers cannot be excluded from consuming the good and consumption by one person doesn’t effect the amount available for others to consume

74
Q

Resource Allocation

A

The way in which a society’s productive assets are used amongst their alternative uses

75
Q

Scarcity

A

A situation that arises because people have unlimted wants in the face of limited resources

76
Q

Specific tax

A

A tax of a fixed amount imposed on the purchase of a commodity

77
Q

Subsidy

A

A grant given by the government to producers to encourage production of a good or service

78
Q

Substitutes

A

Two goods are said to be substitutes if consumers regard them as alternatives, so the demand for one is likely to rise if the price of the other rises.

79
Q

Sunk costs

A

Costs incurred by a firm that cannot be retrieved if the firm ceases trading

80
Q

Superior good

A

One for which the income elasticity of demand is positive, and greater than 1. So that as income rises, consumers spend proportionally more on the good

81
Q

Supply curve

A

A graph showing the quantity supplied at any given price

82
Q

Technical efficiency

A

Attaining the maximum possible output from a given set of inputs

83
Q

Total cost

A

The sum of all costs that are incurred in producing a given level of output

84
Q

Unemployment

A

When people seeking work at the going wage cannot find a job

85
Q

Variable costs

A

Costs that vary with level of output

Micro Economics (2 decks)

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