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ECONOMICS iGCSE > 1.1 THE MARKET SYSTEM > Flashcards

1.1 THE MARKET SYSTEM Flashcards

1
Q

goods

A

things that are produced in order to be sold

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2
Q

finite

A

having an end or a limit

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3
Q

infinite

A

without limits

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4
Q

scarce resources

A

amount of resources available when supply is limited

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5
Q

opportunity cost

A

cost of the next best alternative given up (when marking a choice)

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6
Q

expenditure

A

spending by a government, usually a national government

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7
Q

capital goods

A

those purchased by firms and used to produce other goods such as factories machinery, tools and equipment

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8
Q

consumer goods

A

those purchased by households such as food, confectionery, cars, tablets and furniture

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9
Q

production possibility curve (PPC)

A

line that shows the different combinations of two goods an economy can produce if all resources are used up

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10
Q

economic growth

A

increase in the level output by a nation

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11
Q

variables

A

something that affects a situation in a way that means you cannot be sure what will happen

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12
Q

maximise

A

to increase something such as profit, satisfaction or income as much as possible

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13
Q

revenue

A

money that a business receives over a period of time, especially from selling goods or services

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14
Q

enterprises

A

companies, organisations or businesses

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15
Q

administration

A

activities involved with managing and organising the work of a company or organisation

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16
Q

demand curve

A

line drawn on a graph that shows how much of a good will be bought at different prices

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17
Q

demand schedule

A

table of the quantity demanded of a good at different price levels - can be used to calculate expected quantity demanded

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18
Q

effective demand

A

amount of a good people are willing to buy at given prices over a given period of time supported by the ability to pay

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19
Q

inverse relationship (between price and quantity demanded)

A

when price goes up, the quantity demanded falls and when the price goes down the quantity demanded rises

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20
Q

shift in the demand curve

A

movement to the left or the right of the entire demand curve when there is a change in any factor affecting demand except the price

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21
Q

disposable income

A

income that is available to someone over a period of time to spend; it includes state benefits but excludes direct taxes

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22
Q

inferior goods

A

goods for which demand will fall if income rises or rise if income falls

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23
Q

normal goods

A

goods for which demand will increase if income increases or fall if income falls

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24
Q

substitutive goods

A

goods bought as an alternative to another but perform the same function

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25
Q

complementary goods

A

goods purchased together because they are consumed together

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26
Q

supply

A

amount that producers are willing to offer for sale at different prices in a given period of time

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27
Q

supply curve

A

line drawn on a graph which shows how much of a good sellers are willing to supply at different prices

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28
Q

proportioned relationship (between the price and the quantity supplied)

A

when the price goes up, the quantity supplied also goes up and when the price goes down the quantity supplied goes down

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29
Q

shift in the supply curve

A

movement to the left or right of the entire supply curve when there is any change in the conditions of supply except the price

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30
Q

ventures

A

new business activities or projects that involve taking risks

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31
Q

indirect taxes

A

taxes levied on spending, such as VAT

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32
Q

productivity

A

rate at which goods are produced, and the amount produced in relation to the work, time and money needed to produce them

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33
Q

consumption

A

amount of goods, services, energy or natural materials used in a particular period of time

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34
Q

subsidy

A

money that is paid by a government or organisation to make prices lower, reduce the cost of producing goods or providing a service, usually to encourage production of a certain good

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35
Q

equilibrium price

A

price at which supply and demand are equal

36
Q

market clearing price

A

price at which the amount supplied in a market matches exactly the amount demanded

37
Q

total revenue

A

amount of money generated from the sale of goods calculated by multiplying price by quantity

38
Q

excess demand

A

where demand is greater than supply and there are shortages in the market

39
Q

excess supply

A

when supply is greater than demand and there are unsold goods in the market

40
Q

price elasticity of demand

A

the responsiveness of demand to a change in price

41
Q

inelastic demand
(alternative term: price inelastic)

A

change in price results in a proportionately smaller change in the quantity demanded

42
Q

elastic demand
(alternative term: price elastic)

A

change in price results in a greater change in the quantity demanded

43
Q

perfectly elastic

A

demand where PED (price elasticity of demand)= infinite (an increase in price will result in zero demand)

44
Q

perfectly inelastic demand

A

demand where PED (price elasticity of demand)=0 (a change in price will result in no change in the quantity demanded)

45
Q

unitary elasticity

A

where PED =-1 ( the responsiveness of demand is proportionately equal to the change in price)

46
Q

fast-moving consumer goods (FMCG)

A

goods, especially food that sell very quickly and in large amounts

47
Q

price elasticity of supply

A

responsiveness of supply to a change in price

48
Q

inelastic supply

A

change in price results in a proportionately smaller change in the quantity supplied (alternative term: price inelastic)

49
Q

elastic supply

A

change in a price results in a proportionately greater change in the quantity supplied (alternative term: price elastic)

50
Q

perfectly elastic (supply)

A

where PES (price elasticity of supply) = infinite (producers will supply an infinite amount at the given price)

51
Q

perfectly inelastic (supply)

A

where PES (price elasticity of supply) = 0 (the quantity provided is fixed and cannot be ajusted whatever the price)

52
Q

unitary elasticity (with regard to supply)

A

where PES =1 (a change in price will be matched by an identical change in the quantity supplied)

53
Q

wholesalers

A

person or company that sells goods in large quantities to businesses, rather than to the general public

54
Q

raw materials

A

substances used to make a product

55
Q

income elasticity of demand

A

responsiveness of demand to a change in income

56
Q

discretionary expenditure

A

non-essential spending or spending that is not authomatic

57
Q

excise duty

A

government tax on certain goods, such as cigaretter, alcoholic drinksand petrol that are soldin the country

58
Q

valued-added tax (VAT)

A

tax on some goods and services - businesses pay valued-added tax on most goods and services they buyand if they are VAT registered, charge value-added tax on the goods and services they sell

59
Q

economy

A

system that attempts to solve the basic economic problem

60
Q

private sector

A

provision of goods and services by businesses that are owned by individuals or group of individuals

61
Q

public sector

A

government organisations that provide goods and services in the economy

62
Q

shareholders

A

people or organisations that owns shares in a company

63
Q

dividend

A

part of a company’s profit that is divided among the people with shares in the company

64
Q

assets

A

things or resources belonging to an individual or a business that has value or the power to earn money

65
Q

liabilities

A

amount of debt that is owed or must be paid

66
Q

market failure

A

where markets lead to inefficiency

67
Q

mixed economy

A

economy where goods and services are provided by both the private and the public sectors

68
Q

merit goods

A

goods that are under-provided by the private sector

69
Q

public goods

A

goods that are not likely to be provided by the private sector

70
Q

free rider

A

individual who enjoys the benefit of a good but allows others to pay for it

71
Q

privatisation

A

act of selling a company or activity controlled by the government to private investors

72
Q

monopolies

A

situation where a business actvity is controlled by only one company or by the government, and other companies do not compete with it

73
Q

nationalised industries

A

public corporations previously part of the private sector that were taken into state ownership

74
Q

natural monopolies

A

situation that occurs when one firm in an industry can serve the entire market at a lower cost than would be possible if the industry were composed of many smaller firms

75
Q

diversified

A

if a company or an economydiversifies, it increases the range of goods and services it produces

76
Q

hostile takeover

A

takeover that the company being taken over does not want or agree to

77
Q

takeovers

A

act of getting control of a company by buying over 50 per cent of its shares

78
Q

spillover effects

A

effect that one situation or problem has on another situation

79
Q

external costs

A

negative spillover effects of consumption or production - they affect third parties in a negative way

80
Q

external benefits

A

positive spillover effects of consumption or production - they bring benefits to third parties

81
Q

private costs

A

costs of an economic activity to individuals and firms

82
Q

social costs

A

costs of an economic activity to society as well as the individual or firm

83
Q

private benefits

A

rewards to third parties of an economic activity, such as consumption or production

84
Q

social benefits

A

benefits of an economic activity to society as well as to the individual or firm

85
Q

demand

A

amount of a good that will be bought at given prices over a period of time

ECONOMICS iGCSE (5 decks)

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