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Flashcards

Economics

Billy Revell Economics AS level English 110 cards

Cards in this deck (110)

  1. 1Positive statementA statement of fact that can be scientifically tested to see if it is correct or incorrect
  2. 2Normative statementA statement that includes a value judgement and cannot be refuted just by looking at the evidence
  3. 3NeedSomething that is necessary for human survival such as food, clothing, shelter and warmth
  4. 4WantSomething that is desirable, such as fashionable clothing, but is not necessary for human survival
  5. 5Economic welfareThe economic well-being of an individual, group within society or an economy
  6. 6ProductionA process, or set of processes, that converts inputs into output of goods
  7. 7Capital goodA good which is used in the production of other goods and services. Also known as a producer good.
  8. 8Consumer goodA good which is consumed by individuals or households to satisfy their needs or wants
  9. 9Factors of productionInputs into the production process, such an land, labour, capital and enterprise
  10. 10Finite resourcesA resource such as oil which is scarce and runs out as it's used. Also known as a non-renewable resource
  11. 11Renewable resourceA resource such a timer that with careful management can be renewed as it is used
  12. 12Fundamental economic problemHow best to make decisions about the allocation of scarce resources among competing uses so as to improve and maximise human happiness and welfare
  13. 13ScarcityResults from the fact that people have unlimited wants but there is limited resources
  14. 14Oppurtunity costThe cost of giving up the next best alternative
  15. 15Production possibility frontierA curve depicting the various combinations of two products that can be produced when all the available resources are fully and efficiently employed
  16. 16Economic growthThe increase in the potential level of real output the economy can produce over a period of time
  17. 17Full employmentWhen all who are and willing to work are employed
  18. 18UnemploymentWhen not all of those who are able and willing to work are employed
  19. 19ChoiceChoosing between alternatives when making a decision on how to use scarce resources
  20. 20Resource allocationThe process through which the available factors of production are assigned to produce different goods and services
  21. 21Productive efficiencyFor the economy as a whole occurs when it is impossible to produce more of one good without produce more of one good without producing less of another. For a firm it occurs when the average total cost of production is minimised.
  22. 22Allocative efficiencyOccurs when the available economic resources are used to produce the combination of goods and services that best matches people's tastes and preferences
  23. 23Equilibrium priceThe price at which planned demand for a good or service exactly equals planned supply
  24. 24SupplyThe quantity of a good or service that firms are willing and able to sell at given prices in a given period of time
  25. 25DemandThe quantity of a good or service that consumers are willing and able to buy at given prices in a given period of time. For economists, demand is always effective demand
  26. 26Effective demandThe desire for a good or service backed by an ability to pay
  27. 27Market demandThe quantity of a good or service that all the consumers in a market are willing and able to by at different market prices
  28. 28Condition of demandA determinant of demand, other than the good's own price, that fixes the position of the demand curve
  29. 29Increase in demandA rightward shift of the demand curve
  30. 30Decrease in demandA leftward shift of the demand curve
  31. 31Normal goodA good for which demand increases as income rises and demand decreases as income falls
  32. 32Inferior goodA good for which demand decreases as income increases and demand increases as income falls
  33. 33ElasticityThe proportionate responsiveness of a second variable to an initial change in the first variable
  34. 34Price elasticity of demandMeasures the extent to which the demand for a good changes in response to a change in the price of that good
    PED=percentage change in quantity demanded/percentage change in price
  35. 35Income elasticity of demandMeasures the extent to which the demand for a good changes in response to a change in income.
    YED=percentage change in quantity demanded/percentage change in income
  36. 36Cross-elasticity of demandMeasures the extent to which the demand for a good changes in response to a change in the price of another good.
    XED=percentage change in quantity of A demanded/percentage change in price of B
  37. 37Market supplyThe quantity of a good or service that all firms plan to sell at given prices in a given period of time
  38. 38ProfitThe different between total sales revenue and total cost of production
  39. 39Total revenueThe money a firm receives from selling its output, calculated by multiplying the price by the quantity sold
  40. 40Conditions of supplyDeterminants of supply, other than the good's price, that fix the position of the supply curve.
    These are; wage costs, raw material costs, energy costs, cost of borrowing
  41. 41Price elasticity of supplyMeasures the extent to which the supply of a good changes in response to a change in price of that good
    PES=percentage change in quantity supplied/percentage change in price
  42. 42Excess supplyWhen firms wish to sell more than consumers wish to buy, with the price above the equilibrium price
  43. 43Excess demandWhen consumers wish to buy more than firms wish to sell, with the price below the equilibrium price
  44. 44Joint supplyWhen one good is produced, another good is also produced from the same raw materials
  45. 45Competing supplyWhen raw materials are used to produces one good they cannot be used to produce another good
  46. 46Complementary goodA good in joint demand, or a good which is demanded at the same time as the other good
  47. 47Substitute goodA good in competing demand, namely a good which can be used in place of another good
  48. 48Composite demandDemand for a good which has more than one use
  49. 49Derived goodDemand for a good which is an input into the production of another good
  50. 50Merit goodA good which when consumed leads to benefits which other people enjoy, or a good for which the long term benefit of consumption exceeds the short term benefit enjoyed by the person consuming the merit good. Whether a good should be regarded as a merit good, depends on the value judgements being made
  51. 51ProductionConverts inputs or factor services into outputs of goods and services
  52. 52Short run productionOccurs when a firm adds variable factors of production to fixed factors of production
  53. 53Long run productionOccurs when a firm changes the scale of all the factors of production
  54. 54ProductivityOutput per unit of input
  55. 55Labour productivityOutput per worker
  56. 56Capital productivityOutput per unit of capital
  57. 57Productivity gapThe difference between labour productivity in the UK and in other developed economies
  58. 58SpecialisationA worker only performing one task or a narrow range of tasks. Also, different firms specialising in producing different goods or services
  59. 59Division of labourDifferent workers perform different tasks in the course of producing a good or service
  60. 60TradeThe buying and selling of goods and services
  61. 61ExchangeTo give something in return for something else. Money is a medium of exchange
  62. 62Short runThe time period in which at least one factor of production is fixed and cannot be varied
  63. 63Long runThe time period in which no factors of production are fixed and in which all the factors of production can be varied
  64. 64Fixed costCost of production which does not change with output
  65. 65Variable costCost of production which changes with the amount produced
  66. 66Total costThe whole cost
    (Fixed cost + variable cost) of producing a particular level of output
  67. 67Average costTotal cost of production divided by output
  68. 68Average total costATC = Average fixed costs + average variable costs
  69. 69Long run average costLong run total cost divided by output
  70. 70Economy of scaleAs output increases, long run average cost falls
  71. 71Diseconomy of scaleAs output increases, long run average cost rises
  72. 72Technical economy of scaleA cost saving generated through changes to the productive process as the scale of production and the level of output increase
  73. 73Internal economy of scaleCost saving resulting from the growth of the firm itself
  74. 74External economy of scaleCost saving resulting from the growth of the industry or market of which the firm is a part
  75. 75Total revenueAll the money received by a firm from selling its total output
  76. 76Average revenueTotal revenue divided by output; in a single-product firm, average revenue equals the price of the product
  77. 77Market structureThe organisation of a market in terms of the number of firms in the market and the ways in which they behave
  78. 78Price takerA firm which passively accepts the ruling market price set by market conditions outside its control
  79. 79Price makerA firm processing its power to set the price within the market
  80. 80Perfect competitionA market that displays the six conditions of: a large number of buyers and sellers; perfect market information; the ability to buy or sell as much as is desired at the ruling market price; the inability of an individual buyer or seller to influence market price; a uniform or homogeneous product; and no barriers to entry or exit in the long run
  81. 81Competitive marketA perfectly competitive market is competitive market. However, there are other types of competitive markets. A competitive market is one in which firms strive to outdo their rivals, but it does not necessarily meet all the conditions of perfect competition
  82. 82Concentrated marketA market containing very few times, in the extreme only one firm
  83. 83Pure monopolyWhen there is only one firm in the market
  84. 84Monopoly powerThe power of a firm to act as a price setter rather than price taker
  85. 85Imperfect competitionAny market structure lying between the extremes of perfect competition and pure monopoly
  86. 86Profit maximisationOccurs when a firms total sales revenge its furthest above total cost of production
  87. 87Sales maximisationOccurs when sales revenue is maximised
  88. 88Market share maximisationOccurs when a firm maximises its percentage share of the market in which it sells its product
  89. 89Entry barrierMakes it difficult of impossible for new firms to enter a market
  90. 90Exit barrierMakes it difficult or impossible for firms to leave a market
  91. 91Consumer sovereigntyThrough exercising their spending power, consumers collectively determine what is produced in a market. Consumer sovereignty is strongest in a perfectly competitive market
  92. 92Producer sovereigntyProducers or firms in a market determine what is produced and what prices are charged
  93. 93Natural monopolyThe term has two meanings; first when a country or firm has complete control of a natural resource, and second when there is only room in a market for one firm benefiting from economies of scale to the full
  94. 94PatentA strategic or man-made barrier to market entry caused by government legislation protecting the right of a firm to be the sole producer of a patented good, unless the firm grants royalties for other firms to produce the good
  95. 95Natural barrier to entryA barrier to market entry which not man-made
  96. 96Artificial barrier to entryA barrier to market entry which is man-made
  97. 97Informative advertisingProvides consumers and producers with useful information ankhs goods or services
  98. 98Persuasive advertisingAttempts to persuade potential customers that a good or service possesses desirable characteristics that make it worth buying
  99. 99Saturation advertisingThrough flooding the market with information and persuasion about a firm's product, this functions as a man-made barrier to market entry by making it difficult for smaller firms to compete
  100. 100Product differentiationMaking a product different from other products through product design, the method of producing the product, or through its functionality
  101. 101Quantity setterA firm chooses the quantity of a good to sell, rather than its price. In monopoly, the market demand curve then dictates the maximum price that can be charged if the firm is to successfully sell its chosen quantity
  102. 102Concentration ratioA ratio which indicates the total market share of a number of leading firms in a market, or the output of these firms as a percentage of total market output
  103. 103OligopolyA market dominated by a few firms
  104. 104Resource misallocationWhen resources are allocated in a way which does not maximise economic welfare
  105. 105CollusionCo-operation between firms, for example to fix prices. Some forms of collusion may be in the public interest, for example joint research and labour training schemes
  106. 106InventionCreates new ideas for products or processes
  107. 107InnovationConverts the results of invention into marketable products or services
  108. 108Price competitionReducing the price of a good or service to gain sales by making it more attractive for consumers
  109. 109Limit pricingReducing the price of a good to just above average cost to deter the entry of new firms into the market. Prices are set at levels which are likely to make it unprofitable for potential entrants who might consider coming into the market
  110. 110Predatory pricingTemporarily reducing the price of a good to below average cost to drive smaller firms or new market entrants out of the market

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Billy Revell
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