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32 Cards in this Set
- Front
- Back
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What are Economic Goods? |
Goods that are scarce and therefore have an opportunity cost. |
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What are Free Goods? |
Goods that have no opportunity cost. Eg air. |
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What are Renewable Resources? |
Resources that are able to be replenished over time. |
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What are Non-renewables? |
Resources that are likely to run out. |
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What is Profit? |
When total income or revenue for a firm is greater than total costs. |
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What is a free market economy? |
One in which there is very limited government involvement in providing goods and services. It's main role is to ensure that the rules are fair so that, for example people cannot steal each other's property. |
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What is a production possibility boundary? |
The PPB indicates the maximum possible output that can be achieved given a fixed set if resources and technology in a particular time period. |
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What is productive efficiency? |
When a firm operates at minimum average total cost, producing the maximum possible output from inputs into the production process. |
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What is allocative efficiency? |
This is achieved in an economy when it is not possible to make anyone better off without making someone worse off, or you cannot produce more of one good without making less of another. |
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What is productivity? |
A measure of efficiency, measuring the ratio of inputs to outputs; the most common measure is labour productivity, which is the output per worker. |
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What is human capital? |
The skills, abilities, motivation and knowledge of labour. Improvements in human capital raise productivity and can shift the PPB to the right. |
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What's the division of labour? |
Breaking the production process down into a sequence of tasks, with workers assigned to particular tasks. |
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What is specialisation? |
The production of a limited range of goods by an individual factor of production or firm or country, in cooperation with others so that together a complete range of goods is produced. |
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What is a value judgement? |
Statements or opinions expressed that are not testable or cannot be verified and depend very much on the views of the individual and the values they hold. |
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What is a normative Statement? |
Opinions that require value judgements to be made |
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What is a positive statement? |
Statements that can be tested against real- world data. |
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What is demand? |
The amount that consumers are willing and able to buy at each given price level. |
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Why is effective demand? |
Demand supported by the ability to pay for a good or service. |
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Why is effective demand? |
Demand supported by the ability to pay for a good or service. |
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What is market demand? |
Total demand in a market for a good, the sum of all individuals' demand, at each given price. |
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What is a contraction in demand? |
Falls in the quantity demanded caused by rises in prices. |
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What is a contraction in demand? |
Falls in the quantity demanded caused by rises in prices. |
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Why are extensions in demand? |
Increases in demand caused by changes (falls) in price. |
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What is a normal good? |
Goods or services that will see an increase in demand when income rises. |
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What is a normal good? |
Goods or services that will see an increase in demand when income rises. |
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Why is an inferior good? |
Goods or services that will see demand fall when income rises. |
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What is a normal good? |
Goods or services that will see an increase in demand when income rises. |
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Why is an inferior good? |
Goods or services that will see demand fall when income rises. |
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Why are complementary goods? |
Goods that are consumed together, for example.. Bread and butter |
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What is composite demand? |
A good that is demanded for more than one purpose so that an increase in demand for one purpose reduces the available supply for the other purpose, typically leading to higher prices. |
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What is derived demand? |
When the demand for one good or service comes from the demand for another good or service. |
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What is supply? |
The amount offered for sale at each given price level. |
