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Economics A level > Economics Flashcards for Lesson > Flashcards

Economics Flashcards for Lesson

(90 cards)

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1
Q

Scarcity

A

The fundamental economic problem of having limited resources to
meet unlimited wants.

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2
Q

Opportunity Cost

A

The next best alternative foregone when a choice is made.

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3
Q

Trade-Off

A

A situation where more of one thing means less of another due to
limited resources.

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4
Q

Production Possibility
Frontier (PPF)

A

A curve showing maximum possible combinations of two goods
that can be produced using all resources efficiently.

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5
Q

Specialisation

A

The concentration on a specific task, good, or service to increase
efficiency.

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6
Q

Division of Labour

A

The breaking down of production into separate tasks to increase
productivity.

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7
Q

Utility

A

Satisfaction gained from consuming a good or service.

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8
Q

Diminishing Marginal
Utility

A

The additional satisfaction from consuming one more unit decreases
as consumption increases.

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9
Q

Rational Decision-
Making

A

Choosing options that maximise individual welfare or utility.

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10
Q

Behavioural
Economics

A

Examines psychological and emotional factors influencing decisions.

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11
Q

Bounded Rationality

A

Decision-making limited by information, cognitive ability, and time.

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12
Q

Nudges

A

Subtle policy changes that encourage better decision-making without
restricting choice.

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13
Q

Heuristics

A

Simple rules or shortcuts used to make decisions.

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14
Q

Biases

A

Systematic deviations from rationality (e.g., anchoring, availability,
framing).

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15
Q

Demand

A

The quantity of a good consumers are willing and able to buy at a
given price.

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16
Q

Law of Demand

A

As price falls, quantity demanded rises, ceteris paribus.

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17
Q

Supply

A

The quantity of a good that producers are willing and able to sell at a
given price.

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18
Q

Law of Supply

A

As price rises, quantity supplied rises, ceteris paribus.

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19
Q

Market Equilibrium

A

The price at which quantity demanded equals quantity supplied.

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20
Q

Excess Supply (Surplus)

A

When quantity supplied exceeds quantity demanded at a given
price.

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21
Q

Excess Demand
(Shortage)

A

When quantity demanded exceeds quantity supplied at a given
price.

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22
Q

Shifts vs Movements

A

Movements are caused by price changes; shifts by non-price
factors.

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23
Q

Price Elasticity of Demand
(PED)

A

Responsiveness of quantity demanded to a change in price.

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24
Q

Price Elasticity of Supply
(PES)

A

Responsiveness of quantity supplied to a change in price.

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25
Income Elasticity of Demand (YED)
Responsiveness of demand to a change in income.
26
Cross Elasticity of Demand (XED)
Responsiveness of demand for one good to the price change of another.
27
Allocative Efficiency
Resources are allocated where they are most valued by consumers (P = MC.)
28
Productive Efficiency
Producing goods at the lowest possible cost (minimum AC).
29
Dynamic Efficiency
Efficiency over time through innovation and investment.
30
X-inefficiency
Inefficiency arising from lack of competition, where firms do not minimise costs
31
Profit Maximisation
When a firm produces at the output where marginal cost equals marginal revenue (MC = MR).
32
Revenue Maximisation
Producing the output where marginal revenue = 0.
33
Sales Maximisation
Producing as many units as possible without making a loss.
34
Satisficing
When firms aim for satisfactory rather than maximum profit — common in large firms.
35
Perfect Competition
Many firms, identical products, no barriers to entry, firms are price takers.
36
Monopolistic Competition
Many firms, differentiated products, low barriers to entry, some price- setting power.
37
Oligopoly
Few dominant firms, high barriers, interdependence, potential for collusion or price leadership
38
Monopoly
Single firm dominates, very high barriers, price maker, risk of inefficiency.
39
Contestable Market
Market with low barriers to entry/exit, threat of competition keeps prices low.
40
Collusion
Firms agree (formally or informally) to avoid competition and increase profits
41
Cartel
A formal agreement among firms to limit output or fix prices.
42
Tacit Collusion
Informal collusion where firms follow each other’s lead without explicit agreement.
43
Interdependence
Firms' decisions depend on the anticipated reactions of rivals (common in oligopoly).
44
Non-Pricing Competition
Competing using branding, customer service, packaging, innovation etc.
45
Price Rigidity
Prices remain stable despite changes in cost or demand (common in oligopoly).
46
Economic Growth
An increase in real GDP over time.
47
Business Cycle
Fluctuations in economic activity over time – includes boom, slowdown, recession, and recovery.
48
Boom
Period of rapid economic growth, falling unemployment, rising inflation.
49
Recession
Two consecutive quarters of negative economic growth.
50
Output Gap
The difference between actual GDP and potential GDP.
51
Negative Output Gap
Actual output is below potential, indicating spare capacity.
52
Positive Output Gap
Output is above sustainable potential, often causing inflationary pressure.
53
Inflation
A sustained increase in the general price level
54
Deflation
A sustained decrease in the general price level
55
Disinflation
A fall in the rate of inflation (prices rise more slowly).
56
Unemployment
People willing and able to work who are not currently employed.
57
CPI (Consumer Price Index)
A measure of inflation based on the price of a basket of goods.
58
Fiscal Policy
Government spending and taxation to influence aggregate demand.
59
Budget Deficit
Government spending exceeds revenue.
60
Budget Surplus
Government revenue exceeds spending.
61
Monetary Policy
Central bank control of money supply and interest rates to influence inflation and growth.
62
Interest Rate
The cost of borrowing or reward for saving.
63
Exchange Rate
The value of one currency in terms of another.
64
Supply-Side Policy
Policies aimed at increasing long-run aggregate supply, e.g., education, tax reform, deregulation.
65
Globalisation
Increasing interconnectedness of economies via trade, investment, and technology.
66
Free Trade
Trade without restrictions or tariffs.
67
Protectionism
Use of tariffs, quotas, and subsidies to protect domestic industries.
68
Tariff
A tax on imports
69
Quota
A limit on the quantity of imports.
70
Subsidy
A government payment to domestic producers to lower costs and increase competitiveness.
71
Appreciation
An increase in the value of a currency.
72
Depreciation
A decrease in the value of a currency.
73
Balance of Payments
A record of a country’s transactions with the rest of the world.
74
Current Accounts
Part of the BoP that includes trade in goods, services, income and transfers.
75
Trade Deficit
When the value of imports exceeds the value of exports.
76
Trade Surplus
When the value of exports exceeds the value of imports.
77
Market Failure
When the free market fails to allocate resources efficiently.
78
Externality
A cost or benefit to a third party not reflected in market prices.
79
Positive Externality
External benefit (e.g., education).
80
Negative Externality
External cost (e.g., pollution).
81
Public Goods
Goods that are non-excludable and non-rival (e.g., street lighting).
82
Information Failure
When buyers or sellers lack the information needed to make rational decisions
83
Monopoly Power
Market power that can lead to inefficiency and consumer exploitation.
84
Subsidy
Government financial support to reduce production costs.
85
Tax
Government charge imposed to discourage harmful behaviour or raise revenue.
86
Regulation
Government rules to correct market failure.
87
Price Ceiling
A maximum price set below equilibrium to protect consumers.
88
Price Floor
A minimum price set above equilibrium to protect producers.
89
Polluter Pays Principle
Those who produce pollution should bear the cost of managing it.
90
Cost-Benefit Analysis
Weighing up social costs and benefits of a project or policy.

Economics A level (9 decks)

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