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47 Cards in this Set
- Front
- Back
- 3rd side (hint)
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Demand |
Refers to the quantity of a product consumers are willing and able to buy at different prices in a specified time period. |
Quantity and price |
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Supply |
Refers to the quantity of a product producers are willing and able to sell at different prices in a specified time period. |
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Market failure |
When free market forces failed to achieve allocative and productive efficiency through the price mechanism. |
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Commodity |
A primary product usually used as a raw material to make goods |
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Productive efficiency |
When firms are producing at the lowest point on their average cost curve |
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Allocative afficiency |
When consumers are getting the right type of good in the right quantities |
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Monopoly |
When a firm controls more then 25% of market shares in a market |
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Monopoly power |
When firms have the ability to act as price makers, (can have some influence on price) |
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Pure monopoly |
When a firms have 100% market share in a market |
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Price elasticity of demand |
The responsiveness of quantity demand to a change in price |
Qd%/p% |
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Price elasticity of supply |
The responsiveness of quality supplied to a change in price |
Qs%/p% |
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Income elasticity of demand |
The responsiveness of quantity demand to a change in income |
Qd%/Y% |
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Cross elasticity of demand |
The responsiveness of demand of good A to a change in price of good B |
A qd%/B qd% |
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Inferior good |
Has a negative income elasticity of demand |
>0 |
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Normal good |
Has a positive income elasticity of demand |
<0 |
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Negative externalities |
Adverse affects on 3rd parties from consumption or production of a good |
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Positive externalities |
Good effects on 3rd parties from consumption or production of a good |
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Government intervention |
When the government interferes in a market to try and reduce market failure. |
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Subsidy |
A payment by the government to reduce a firms production cost and increase output |
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Competitive demand |
When two or more goods are substitutes for each other |
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Composite demand |
When a good is demanded for two distinct purposes |
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Joint demand |
When two or more compliments are bought together |
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Joint supply |
When two or more goods are produced together so that a change in supply of one good will mean a change in the supply of the other good |
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Derived demand |
When the demand for one good is the result of demand for another good |
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Merit good |
A good that is more beneficial for you than you realise at the time |
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Demerit good |
A good that is worse for you than you realise at the time |
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Government failure |
When there is a misallocation of resources arising from government intervention to correct market failure |
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Economic good |
Goods where resources are used to produce them (opportunity cost) |
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Free good |
Does not require scarce resources to produce (no opportunity cost involved) |
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The factors of production |
Land, labour, capital and enterprise to produce output |
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Land |
All natural resources used to produce goods and services |
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Labour |
All human effort used to produce goods and services |
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Capital |
Man made goods used to produce other goods and services |
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Enterprise |
Land, labour and capital combined to produce output |
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Geographical mobility |
How easily can workers move to new areas in search of work |
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Occupational mobility |
How easily can workers move between different types of jobs |
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Opportunity cost |
Is the cost of the next best alternative foregone when an economic agent chooses a certain action |
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Consumer surplus |
Is the extra amount that consumers would be prepared to pay for a product above what they actually pay |
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Producer surplus |
Is the extra amount that producers are paid above what they were willing to accept to supply a product |
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Market |
Where buyers and sellers meet for the purpose of exchanging goods or services |
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Specialisation |
The process where workers, firms, regions or even countries concentrate on a particular product or task |
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Pareto efficiency |
When we have both allocative and productive efficiency. |
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Marginal cost |
The cost of producing one extra unit of a product |
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Income |
The flow of money going to factors of production |
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Wealth |
Current value of a stock of assests owned by someone or society as a whole |
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Public good |
Non rivalry and non excludable |
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Economies of scale |
Factors which cause acreage costs to fall as output increases |
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