Use LEFT and RIGHT arrow keys to navigate between flashcards;
Use UP and DOWN arrow keys to flip the card;
H to show hint;
A reads text to speech;
99 Cards in this Set
- Front
- Back
|
Commodity |
A good, usually referee to as raw goods or semi-manufactured goods, unbranded and indistinguishable from each other |
|
|
Competetion |
A market situation in which there are a large number of buyers |
|
|
Complementary goods |
Goods that are consumed together like DVD's and DVD players |
|
|
Complete market failure |
Where the market fails to provide a product at all |
|
|
Composite demand |
A good that is demanded for more than one purpose so that demand for one product reduces supply for the other purpose |
|
|
Contraction in supply |
When the amount offered for sale is reduced because the price has fallen |
|
|
Contractions in demand |
Falls in the quantity demanded of a good caused by an increase in price |
|
|
Demand |
The amount that consumers are willing and able to buy at each price level |
|
|
Demerit good |
A good that would be over-consumed in a free market, brings less overall benefit to consumers than they realise |
|
|
Deregulation |
The process of removing government controls from market |
|
|
Derived demand |
When the demand for one good or service comes from the demand from another good or service, demand for cars stimulates the demand for steel |
|
|
Discoraged workers |
Workers who leave the labour market because despite numerous attempts they are unable to find a job |
|
|
Diseconomies of scale |
Where an incense in the scale of production lease to an increase in average total costs for firms |
|
|
Disequlibrium |
A situation within the market where supply does not equal demand |
|
|
Division of labour |
Breaking the production process down into a sequence with workers assigned to particular tasks |
|
|
Economic goods |
Goods that are scarce and therfore have an opportunity cost |
|
|
Economies of scale |
Where an increase in the scale of production leads to reductions in average total costs for firms |
|
|
Effective demand |
Demand supported by the ability to pay for a good or service |
|
|
Equilibrium |
The price at which demand is equal to supply and there is no tenancy for change |
|
|
Excess demand |
When demand is greater than supply at a given price |
|
|
Excess supply |
When supply at a particular price is greater than demand this should signal to producers to lower prices |
|
|
Extension in supply |
When there is an increase in supply because the market price has risen |
|
|
Extensions in demand |
Increases in demand caused by changes (falls) in price |
|
|
Externalities |
Costs of benefits that spill over to third parties external to a market transaction |
|
|
Factor market |
The market for the factors of production that make other goods and services |
|
|
Failure of information |
Where economic agents do not properly percieve the benefits or disadvantages of a transaction |
|
|
Fixed costs |
Costs of production that do not vary as output changes |
|
|
Free goods |
Goods that have no opportunity cost in supply |
|
|
Free-rider problem |
Where some consumers benefit from other consumers purchasing a good, particularly in the case of public goods |
|
|
Geographial immobility |
Where workers find it difficult to move to where employment opportunities may be, due to family ties and differences in housing costs |
|
|
Goods and services |
Goods are considered to tangible products that are physical where as services are not tangible |
|
|
Government failure |
When government intervention to correct market failure does not improve the allocation of resources or leads to a worsening of the situation. |
|
|
Human capital |
The skills, abilities, motivation and knowledge of labour. Shift the PPF to the right. |
|
|
Incidenice of tax |
Proportion of tax that is passed onto the consumer, when demand is price inelastic the incidence of tax tends to be high. |
|
|
Income |
A flow of earnings to a factor of production over a period of time. Eg, wages or salaries. |
|
|
Income elasticity of demand |
The proportion to which demand is effected by a chance in incomes. % change in incomes ÷ % change in demand |
|
|
Indirect tax |
A tax that doesn't directly effect spending. |
|
|
Inferior good |
Goods or services that have lower demand when incomes are higher. Negative income elasticity of demand. |
|
|
Investment good |
A good that increases in value after a period of time |
|
|
Invisibles |
Intangibles such as the provision of insurance and banking services. |
|
|
Joint supply |
When the production of one good also results in the production of another. Eg cows provide milk beef and leather |
|
|
Marginal external benefit |
The spillover benefit to third partys of an economic transaction |
|
|
Marginal external cost |
The spillover cost to third parties of an economic transaction |
|
|
Marginal probate benefit |
The benefit to an individual or firm of an economic transaction |
|
|
Marginal private cost |
The cost to an individual or firm as a result of an economist transaction |
|
|
Marginal social benefit |
The full benefit to society of an economic transaction, MEB+MPB |
|
|
Marginal social cost |
The full cost to society of an economic transaction, MEC+MPC |
|
|
Market clearing price |
The price at which all goods that are supplied will be demanded |
|
|
Market demand |
Total demand in a market for a good, the sum of all individuals' demand, at each given price. |
|
|
Market failure |
Where the market fails to produce what consumers require at the lowest possible cost |
|
|
Market mechanism |
The interaction of the forces of supply and demand, leading to an equlibrium price and quantity of a product. |
|
|
Market supply |
the sum of all individuals' supply curve at each given price |
|
|
maximum price |
a price ceiling above which the price of a good or service is not allowed to increase, must be below the equlibrium to work. |
|
|
merit good |
a good that would be under-consumed in a free market, as individuals do not fully perceive the benefits obtained from consumption. |
|
|
Minimum price |
a price floor below which the price of a good or service cannot decrease, must be above equlibrium to have any effect. |
|
|
monopoly |
a market structure dominated by a single seller of a good. |
|
|
negative externatities |
costs imposed on a third party not involved with the consumption or production of a good. |
|
|
normal goods |
goods or services that will see an increase in demand as incomes rise |
|
|
occupational immobility |
when workers may find it difficult to secure new jobs simply because the lack the requires skills and training |
|
|
opportunity cost |
the next best alternative forgone when an economic decision is made. |
|
|
partial market failure |
where the free market provides a product but with a misallocation of resources |
|
|
planned supply |
the amount producers plan to produce at each given price |
|
|
pollution permit |
a permit sold to firms by the government, allowing them to pollute up to a certain limit |
|
|
positive externality |
a positive spillover effect to third parties of a market transaction |
|
|
price elasticity of demand |
the responsiveness of demand according to changes in the price level. % change in quantity demanded divided by % change in price |
|
|
private good |
a good that is exclude and rival in consumption |
|
|
product markets |
markets in which all kinds of goods and services are traded. |
|
|
production |
the process that converts factor inputs to outputs of goods and services |
|
|
productive efficiency |
when a firm operates at minimum average total cost, producing the maximum possible outputs from inputs into the production process. |
|
|
productivity |
the measure of efficiency, measuring the ratio of inputs to outputs, the most common measure is labor productivity, which is the output per worker per time period (often per hour) |
|
|
profit |
when total income or revenue for a firm is greater than total costs |
|
|
public good |
a good which posesses the characteristics of being non-excludable and non-rivalry in consumption |
|
|
renewable goods |
goods that are able to be replenished over time unlike oil, gas and coal resources |
|
|
specialisation |
the production of a limited range of goods by an individual factor of production or firm or country, in cooperation of others so that together a complete set of goods is provided |
|
|
stock |
a quantity measured at a particular point in time |
|
|
subsidies |
payments by government to producers to encourage production of a good or service. often associated with farmers and help to reduce prices paid by consumers and outputs are higher. |
|
|
substitutes |
goods that will be used as an alternative to another good, for example mars and snickers, train and bus. These goods have a positive cross price elasticity of demand. |
|
|
supply |
the amount offered for sale at each given price. |
|
|
total factor productivity |
the overall productivity of inputs used by a firm in producing a particular level of output |
|
|
trade union |
an organisation of workers set up to negotiate on wages, working hours and working conditions with employers on behalf of its workers |
|
|
variable costs |
costs of production that may vary with output |
|
|
visibles |
exports or imports that are tangible and that you can see and touch as it crosses international boundaries |
|
|
wealth |
a stock of owned assets eg, housing property, savings and shares |
|
|
weighting |
where a commodity is given a weighting proportional to its importance in the general pattern of consumer spending |
|
|
perfectly inelastic |
where an elasticity measure is 0. Where output is not at at all effected by prices. Shown by a vertical curve |
|
|
perfectly elastic |
where an elasticity measure is infinity, where a change in price results in the god no longer being demanded at all. shown by a horizontal curve |
|
|
Market clearing price |
The price at which all goods that are supplied will be demanded. |
|
|
Market demand |
Total demand in a market for a good, the sum of each individuals demand at each given price. |
|
|
Market failure |
Where the market fails to produce what consumers require at the lowest possible cost |
|
|
Market mechanism |
The interaction of the forces of supply and demand, leading to an equilibrium price and quantity for a product |
|
|
Market supply |
The sum of all individual firm's supply curves at each given price |
|
|
Maximum price |
A price ceiling above which the price of a good or service is not allowed to increase. Must be below equlibrium to have an effect. |
|
|
Merit good |
A good that would be under-consumed in a free-market as individuals do not fully percieve the benefits obtained from consumption |
|
|
Minimum price |
A price floor below which a good or service is not allowed to increase, to have any effect it must be above equlibrium |
|
|
Monopoly |
A market structure dominated by a single provider of a good |
|
|
Negative externalities |
Costs imposed onto third parties not involves In the production or consumption of a good. |
|
|
Normal goods |
Goods or services that wI'll see an increase in demand when incomes rise. Have a positive income elasticity of demand |
|
|
Opportunity cost |
The next best alternative forgone when an economic decision is made |
|
|
Partial market failure |
When a market provides a product but with a misalocation or resources |
