Chapter 2 : Definitions Flashcards Preview

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Flashcards in Chapter 2 : Definitions Deck (51):
1

Market

Way of bringing together buyers and sellers to buy and sell goods and services

2

Market economy

Economy where scarce resources are allocated by the market forces of supply and demand

3

Primary sector

Direct use of natural resources
eg. Oil

4

Secondary sector

All activities in an economy concerned with either manufacturing / construction

5

Tertiary sector

Economy activities that involve the idea of a service

6

Factor market

Market where services of factors of production are bought and sold

7

Product market

Market where final goods / services are offered to consumers, businesses and the public service

8

Exchange

Giving up something that an individual/firm has, in return for something they wish to have but don't possess

9

Specialisation

Process by which individuals, firms, regions and whole economies concentrate on producing those products that they're best at producing

10

Division of labour

Where workers specialise in one area of the production process

11

Demand

Willingness and ability to purchase a good / service at the given price in a given time period

12

Law of demand

For most products the quantity demanded varies inversely with its price

13

Individual demand

The demand for a good/service by an individual consumer

14

Market demand

Total demand for a good / service found by adding together individual demands

15

Subsidy

An amount of money the government gives directly to firms to encourage production and consumption

16

Tax

A compulsory payment to the government

17

Elastic demand

Measures how responsive demand is to changes in price

18

Law of supply

For most products the quantity supplied varies directly with its price

19

Supply

Ability and willingness of firms to provide goods and services at each price in a given time period

20

Individual supply

Supply of a good or service by an individual producer

21

Market supply

Total supply of a good/service as a result of adding together all individual producers' supplies

22

Elastic supply

Measures how responsive supply is to changes in price

23

Price

Sum of money you have to pay for a good / service

24

Efficiency

Optimal production and distribution of scarce resources

25

Market forces

Factors that determine price levels and availability of goods and services in an economy without government intervention

26

Competition

Where different firms are trying to sell a similar product to a consumer

27

Monopoly

Sole producer / seller of a good or service

28

Oligopoly

Small number of firms control the large majority of market share

29

Profit

Amount of money a producer has left after all costs are paid

30

Productivity

Measure of degree of efficiency in the use of factors of production in the production process

31

Average cost

Cost of producing a unit

32

Total cost

All costs of a firm added together

33

Total revenue

Total income of a firm from the sale of its goods and services

34

Average revenue

Revenue per unit sold

35

Loss

When a firm's revenue is less than its costs

36

Economies of scale

As the number of unit increases, the cost per unit decreases

37

Labour market

Consists of supply of labour by households and demand for labour by firms

38

Supply of labour

Total number of people who are willing and eligible to supply their labour (including unemployed)

39

Gross pay

Amount of money an employee earns before any deductions are made

40

Income tax

Tax levied directly on personal income

41

National insurance

Contribution paid by workers and their employers , towards cost of state benefits

42

Net pay

Amount of money an employee is left with after deductions are made from the gross pay

43

Pension

Fixed amount paid at regular intervals to a person

44

Money

Anything that's generally accepted as a means of payment for goods and services

45

Financial sector

Financial organisations and their products , involves flow of capital

46

Medium of exchange

Anything that sets the standard of value of goods and services acceptable to all involved parties in a transaction

47

Investment

Purchase of capital goods used to produce further goods and services

48

Rate of interest / interest rate

Cost of borrowing money

49

Building society

Mutual financial institution that's owned by its members. Primary objective : Receive deposits from its members + lend money for members to purchase property

50

Mortgage

Agreement with a financial institution to borrow money to purchase a property

51

Insurance company

Financial institution that guarantees compensation for specified loss / damage in return for an agreed premium