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Economics IGCSE > A - Market System > Flashcards

A - Market System Flashcards

(67 cards)

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1
Q

Market

A

Where buyers and sellers communicate and exchange goods and services for money

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2
Q

Functions of market system

A
  1. Price determination

2. Resource allocation

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3
Q

Demand

A

Amount of good BOUGHT at given prices over period of time

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4
Q

Supply

A

Amount of good supplied at given prices over period of time

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5
Q

Demand schedule

A

Amount of good DEMANDED at different prices in a table

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6
Q

Demand curve

A

Demand schedule plotted on graph

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7
Q

Correlation of price and Qd

A

Inversely related / negatively correlated

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8
Q

Factors affecting demand (6)

A

SCAIPT

Substitutes, Complements, Advertising, Income, Population, Tastes and fashion

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9
Q

Types of goods (based on income)

A

Normal
Inferior
Luxury

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10
Q

Population demographics (4)

A

Age, gender, geography, ethnicity

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11
Q

Factors affecting supply

A

SCNPTT

Subsidies, (production) Cost, Natural conditions, Prices of other goods, Technology, (indirect) Taxes

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12
Q

Movement vs shift of curve

A

Movement - affected by price

Shift - affected by many factors

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13
Q

Equilibrium price

A

When demand and supply equal

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14
Q

Change in equilibrium price and quantity after change in supply and demand

A

Supply decreases - E price increases, quantity decreases

Demand decreases - E price decreases, quantity decreases

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15
Q

Total revenue

A

Amount of money generated from sale of output

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16
Q

Price elasticity of demand

A

Responsiveness of demand to change in price

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17
Q

Inelastic D - definition, slope, value of elasticity

A

Change in demand small in proportion to change in price; steep slope; negative with number < 1

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18
Q

Elastic D - definition, slope, value of elasticity

A

Change in demand large in proportion to change in price; flat slope; negative and number > 1

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19
Q

Factors affecting price elasticity of demand

A

(SIN)

proportion of Income, degree of Necessity, number of Substitutes

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20
Q

Perfectly (in)elastic

A

P inelastic - vertical line - demand never changes

P elastic - horizontal line - price elasticity infinite

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21
Q

Price elasticity of supply

A

Responsiveness of supply to change in price

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22
Q

Inelastic S - definition, slope, value of elasticity

A

Change in supply small in proportion to change in price; steep upwards slope; positive and less than 1

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23
Q

Factors affecting PES

A

TIME (SPS)

Stock levels, Production speed, Spare capacity

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24
Q

Value of inelastic vs elastic IED

A

Inelastic - between 1 and -1

Elastic - >1 or

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25
Normal vs inferior goods for IED
Normal - positive IED | Inferior - negative IED
26
Factors affecting IED
Necessities vs luxuries
27
Effect of price cuts on demand (in)elastic goods
D Inelastic - decreases total revenue | D elastic - increases total revenue
28
Effect on price increases on D (in)elastic goods
D Inelastic - price increases increase revenue | D elastic - price increases decrease revenue
29
Effects of IED on firms
Firms want to switch to products that have high IED eg. toys when people can richer
30
Effects of price elasticity on government
Governments impose taxes on price inelastic goods so consumers cannot avoid them
31
Scarcity
Finite resources, infinite needs and wants
32
Basic economic problems
What / how / for whom to produce?
33
Production possibility curve
1. How a country's resources can be allocated to producing different combinations of two goods 2. Shape of quadrant
34
Definition of economy
System attempting to solve the basic economic problems
35
Types of economies
Market - market forces and private businesses Planned - government Mixed - private and public
36
Mixed economies in solving what to produce
Private - only produce what consumers want | Public - provides under-provided goods eg. Edu / health
37
Mixed economies in solving how to produce
Private - maximise quality, minimise cost | Public - government decides
38
Mixed economies in solving for whom to produce
Private - who can afford | Public - free, paid by taxes
39
Define efficiency
1. Minimise cost 2. Minimise resources 3. Only needed goods produced
40
How public sector ensures efficiency
Sets government targets / asks private corporations to provide services
41
How private sector ensures efficiency
Competition & survival only for those with quality goods at fair prices
42
Instances of market failure
NMLM | Negative externalities, missing markets, lack of competition, merit goods
43
Role of public sector
1. Provide under-provided or non-provided goods 2. Competition 3. Penalise those imposing costs
44
Labour
People available for work
45
Division of labour definition
1. Break production process into small steps 2. Each worker given role 3. Concentrate on best role
46
Advantages of division of labour to firms
Productivity 1. Efficiency - workers expert and use of specialist machines 2. Production time decreases 3. Organisation and structure easier
47
Advantages of division of labour for workers
1. Employment - experts 2. Job satisfaction, promotion prospects 3. Higher pay
48
Disadvantages of specialisation to firms
1. Productivity low - boring jobs 2. Lack flexibility - rigid roles 3. Inefficient - process stopped by one
49
Disadvantages of division of labour on workers
1. Demoralised | 2. Unemployment - automation or specialised skill not required
50
Wage rate and equilibrium wage
Determined by supply and demand of labour | - equilibrium - supply and demand for labour equal
51
Factors affecting demand for labour
DLSC | Demand for goods, Labour productivity, Substitutes, other Costs
52
Factors affecting supply of labour
FAM | Females, Age (retirement, school-leave), Migrants
53
Reasons for wage difference
1. Skills, training, qualifications required different 2. Dangerous and dirty 3. Trade unions 4. Expanding industries
54
Quality of labour characteristics
1. Increase productivity 2. Invest w training and edu 3. Favour literate, numerate, communicators
55
Define minimum wage
Gov interference; companies not paying below minimum hourly wage
56
Minimum wage benefits
1. In poverty 2. Disadvantaged workers 3. Businesses - more motivation
57
Negative externality of minimum wage
Set above equilibrium - reduce employment
58
Trade unions' roles
1. Negotiate w businesses 2. Benefits eg. Strike wage 3. Government legislate 4. Solve legal disputes
59
Effects of trade unions
1. Pressurise businesses w threats 2. Increase wage 3. Unemployment
60
Ways to avoid job losses from high wage
1. Increase labour productivity 2. Charge consumers more 3. Cut profit margin
61
Production
Process of converting resources into goods and services
62
Four factors of production
Land, labour, capital, entrepreneurship
63
Role of entrepreneurs
1. Organisers 2. Risk-takers 3. Business idea 4. Owner
64
Labour or capital intensive
Labour > capital or opposite (services vs manufacturing)
65
Characteristics of productivity
1. Output per unit input 2. Effectiveness 3. Lower costs, higher profits
66
Primary sector 4 categories
Extracting raw materials 1. Fishing 2. Agricultural 3. Mining and quarrying 4. Forestry
67
Secondary sector definition
Converting raw materials into semi-finished or finished goods

Economics IGCSE (1 decks)

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