Definitions Flashcards
(20 cards)
Market
Buyers and seller to buy and sell goods and services
Specialisation
The process by which individuals, firms, regions, and whole economies concentrate on producing those products that they are best a producing
Exchange
The giving up of something that the individual or firm has in return for something they wish to have but don’t possess
Division of labour
Where workers specialize in or concentrate on one area of the production process
Law of demand
For most products the quantity demanded varies inversely with its price
Elastic demand
When percentage change in quantity demanded is greater than the percentage change in price
Inelastic demand
When percentage change in quantity demanded is less than the percentage change in price
Law of supply
For most products the quantity supplied varies directly with price
Elastic supply
When the percentage change in quantity supplied is greater than the percentage change in price
Inelastic supply
When the percentage change in quantity supplied is less than the percentage change in price
Price
The sum of money you have to pay for a good or service, determined by the interaction of supply and demand
Allocation of resources
How scarce resources are distributed among producers and how scare resources goods and services are allocated among consumers
Determination of price
The interaction of the free market forces of demand and supply to establish the general price level of price for a good or service
Competition
Where different firms are trying to sell a similar product to a consumer
Profit
The amount of money a producer has left after all cost have been paid
Productivity
Measure of the degree of efficiency in the use of factors of production in the production process
Labour market
Where workers sell their labour and employers buy the labour
Supply of labour
The total number of people who are willing and eligible to supply their labour, included unemployed
Money
Anything that is generally accepted as a means of payment for a good or service
Medium of exchange
Anything that sets the standard of value of goods and services acceptable to all parties involved in a transactions
