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Econ 1 > Test 1 > Flashcards

Test 1 Flashcards

1
Q

non-renewable resources

A

resources that once used will never be replenished and will run out one day.

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2
Q

renewable resources

A

resources that can be used and replaced/recreated. Won’t run out e.g. trees and water

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3
Q

consumer goods

A

goods and services that are used by people to satisfy their needs and wants

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4
Q

capital goods

A

goods that are used in the production of other goods, such as factories, offices, roads, machines, and equipment.

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5
Q

Specialization

A

the production of a limited range of goods by an individual, firm or country in co-operation with others so that together a complete range of goods is produced

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6
Q

division of labour

A

the specialization of workers who perform different tasks, at different stages of production, to make a good or service in co-operation with other workers.

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7
Q

productivity

A

output per unit of input employed

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8
Q

labour productivity

A

output per worker

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9
Q

capital productivity

A

output per unit of capital employed

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10
Q

Public sector

A

the state or government sector of the economy

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11
Q

Private sector

A

the part of the economy owned by private individuals, firms, and charities

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12
Q

Money

A

anything that is widely accepted as payment for goods and services performed or repayment of past debt.

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13
Q

What are the functions money have to fulfill

A
  • Medium of exchange
  • Measure of value
  • A store of value
  • A method of deferred payment
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14
Q

Barter economy

A

an economy that has no money rather exchange is conducted directly by swapping one good with another.

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15
Q

Double-coincidence of wants

A

Where each party to the transaction wants what the other has to trade

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16
Q

Assets

A

resources owned by a business or an economic entity

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17
Q

Market mechanism

A

is what allocates resources through bringing together buyers and sellers who agree on a price for the product or resource being sold

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18
Q

Consumer welfare

A

is the level of well-being or prosperity or living standards if an individual or group of individuals such as a country

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19
Q

Utility

A

the satisfaction or benefit derived from consuming a good or a set of goods

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20
Q

resources (econ)

A

Production inputs/factors of production

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21
Q

productively inefficient

A

is where it is possible to produce more without an opportunity cost as resources aren’t fully and/or efficiently used up

22
Q

How do PPF curves shift outwards (increase production)?

A

Increase the quantity and/or the quality of their factors of production

23
Q

Demand (effective)

A

The quantity of a good or service consumers are willing and able to buy at a given price in a given time period

24
Q

Supply

A

The quantity of a good or service suppliers are willing to produce at a given price in a given time period

25
Q

What affects the supply curve?

A 
PINTS WC :
Productivity 
Indirect Tax 
No. Firms
Technology 
Subsidy 
Weather
Cost of production
26
Q

price mechanism

A

is the market and performs 4 functions: ARSI
it ALLOCATES scarce resources by RATIONING excess demand/supply by signaling to suppliers that prices are either too high or too low, who have the incentive to change prices in hopes to maximize profit rates

27
Q

Consumer surplus

A

This is the difference between the price consumers are willing and able to pay for a good/service and what they actually do pay. This is the region under the demand curve and above the price line. This illustrates the extent of consumer welfare.

28
Q

Producer surplus

A

The difference between the price producers are willing and able to supply a good/service for and the price they actually receive. It is the region above the supply curve and under the price line. This illustrates the extent of producer welfare.

29
Q

Society surplus

A

society surplus is the sum of consumer and producer surplus (Consumer surplus + producer surplus)

30
Q

What are the factors affecting the elasticity of demand?

A 
SPLAT:
Substitutes 
Percentage of income
Luxury/necessity 
Time period
31
Q

What affects the elasticity of supply?

A 
Pssst : 
Production Lag 
Stocks 
Spare Capacity 
Substitutability of Factors of production
Time
32
Q

production lag

A

Time lags occur in production, particularly in agriculture, when decisions about the quantity to be produced are made well ahead of the actual sale. Demand and the price may change in the interval, creating a problem for the producer.

33
Q

Spare Capacity

A

the ability of a supplier to produce more of a product that is now being produced

34
Q

bumper yields

A

occurs within agriculture where crop yields an unusually productive harvest. This may be due to good weather.

35
Q

XED (cross elasticity of demand)

A

measures the responsiveness of a good or service given a change in the price of another

36
Q

Substitutes

A

these are goods that can be replaced by another to satisfy a want. These have a positive XED with each other.

37
Q

Complements

A

These are goods that are purchased with other goods to satisfy a want. These have a negative XED.

38
Q

Buffer Stock

A

Buffer Stock is a policy used by the government to stabilize fluctuating commodity prices to protect both producers (if the price goes too low) and consumers (if the price goes too high)

39
Q

rational consumers

A

are assumed in behavioral economics to make decisions in accords to maximizing utility

40
Q

minimum price

A

The lowest price firm can charge on consumers. This is done to protect suppliers from low prices and therefore income, this also may lead to an expansion within the market.
It may also be used to affect profitability where a non-garunteed minimum price is placed and profitability
is affected by the business causing firms to exit the market/

41
Q

de-merit good

A

a good or service whose consumption is considered to be bad for you

42
Q

merit good

A

a good or service whose consumption is considered to be good for you

43
Q

indirect tax

A

a tax on expenditure that increases costs of production, this may be put in order to discourage the production of the good or service.

44
Q

ad valorem tax

A

a tax charged as a percentage of the good and so increases as price increases

45
Q

specific/unit tax

A

a tax charged on volume

46
Q

External cost

A

cost external to an exchange where a negative third part effect is invoked as a spillover from production or consumption. This is a cost that the price mechanism fails to take into account and is the difference between social and private costs.

47
Q

External Benefits

A

where third parties of a transaction are positively affected by a transaction and are where social benefits exceed private benefits

48
Q

Government Failure

A

is where government intervention in a market leads to a less efficient allocation of resources and greater welfare loss as he cost related to the government intervening is greater than the benefits derived

49
Q

Maximum price

A

This is the highest price firms are able to charge on consumers and is set in order to make a good/service more affordable to consumers.

50
Q

Information Gaps

A

where buyers or sellers do not have access to the information needed to make a fully informed decision

51
Q

Asymmetric information

A

where one group has superior information to other groups in a transaction.

52
Q

Subsidies

A

government payments/ grants to encourage the production of a good

Econ 1 (2 decks)

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