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30 Cards in this Set
- Front
- Back
- 3rd side (hint)
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Opportunity cost
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Highest valued alternative that was sacrificed for the option that was chosen
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Specialisation
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When individuals households firms or countries concentrate on producing certain goods and services and trading the services with each other
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Division of labour
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Is specialisation by workers on one particular part of the production process
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Positive statement
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Is purely descriptive and based on based on testable theories
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Normative statement
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Is based on our views and personal judgements
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Production possibility frontier (PPF)
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A curve showing all the maximum possible combination of two goods that a country can produce within a certain time period within a specified time period with all its resources fully and efficiently used
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Consumer surplus
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The difference between the price a consumer would be willing to pay and the price they had to pay
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Producer surplus
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The difference between the price a supplier would have been willing to accept and the market price they actually received
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Indirect tax
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Is a tax on expenditure
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Ad valorem tax (VAT)
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Increases with the price of a good
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flat/specific tax
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The same duty paid no matter what the price of the good is
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Derived demand
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Is demand for labour
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Free market economy
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Occurs where there is an absence of government intervention. Firms are privately owned and decisions on what to produce and how to produce goods are left to market forces
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Mixed economies
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Involves a degree of government intervention many firms remain privately owned.
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Command economies
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The government decides what to produce and how to produce goods
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Is the demand
More vertical or horizontal when it is inelastic |
Vertical
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Is the demand curve more vertical or horizontal when it is elastic
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Horizontal
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Externalities
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These are spillover effects arising from some sort of economic activity that are imposed on third parties
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Negative externalities/ external cost
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When the social cost of an economic activity are greater that the private cost
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Positive externalities/ external benefits
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Arise when the social benefits of an economic action are greater than the private benefits
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Cost benefit analysis
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Is a form of investment appraisal
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Public good are
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Non-rivalry and non excludability
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Negative externalities/ external cost
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When the social cost of an economic activity are greater that the private cost
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Positive externalities/ external benefits
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Arise when the social benefits of an economic action are greater than the private benefits
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Cost benefit analysis
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Is a form of investment appraisal
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Public good are
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Non-rivalry and non excludability
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Symmetric information
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Is when buyers and sellers have access to the same amount of information and the products
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+ Add a hint
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Asymmetric information
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Is when buyers and sellers have different amounts of information
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+ Add a hint
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Subsidy
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Is a grant provided by the government to encourage the production and consumption of a particular good or service
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+ Add a hint
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Labour market immobility
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Is a type of market failure that result from the inability of workers to move easily between jobs
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+ Add a hint
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