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Econmics > Economics Year 1 Topic 1 > Flashcards

Economics Year 1 Topic 1 Flashcards

(96 cards)

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1
Q

asymmetric information

A

One party knows more than the other in a transaction creating an unfair advantage

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2
Q

Information failure

A

When both people in an exchange don’t have the correct or enough knowledge to make a decision

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3
Q

Moral Hazard

A

Econmic agents makes a decision in their own interest knowing risks that could harm others

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4
Q

principal-agent problem

A

Principal employs an agent to perform duty’s that conflict with the agents interests

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5
Q

imperfect information

A

Where both buyers and sellers or either or lack information to make a informed decision

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6
Q

Market failure

A

Where there is too much demand for too little supply or too little demand for too much supply

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7
Q

Normative statement

A

A statement which cannot be supported because it’s a value of judgement

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8
Q

Positive statement

A

A statement that can be supported by evidence

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9
Q

positive economics

A

Study of allocation of resources

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10
Q

Model

A

A hypothesis which is refutable by empirical evidence

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11
Q

Ceteris Paribus

A

all things being equal

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12
Q

normative economics

A

The study of which scarce resources are allocated

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13
Q

Economic Problem

A

Unlimited wants to scarce recourses

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14
Q

Law

A

A model which has been verified by empirical evidence

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15
Q

Capital

A

As a factor of production, the stock of manufactured resources used in the production of goods and services

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16
Q

Labour

A

as a factor of production is the workforce

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17
Q

Land

A

as a factor of production, is all natural resources

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18
Q

oppertunity cost

A

the value of the best alternative not chosen

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19
Q

factors of production

A

Land, labor, and capital; the three groups of resources that are used to make all goods and services

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20
Q

Entrepreneurs

A

individuals who seek out profitable opportunities for production and take risks in attempting to exploit these

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21
Q

barter

A

Exchange goods without involving money.

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22
Q

division of labor

A

Specialisation by workers, that preform different tasks at different stages to become more effective

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23
Q

primary sector

A

Extractive and agricultural industries

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24
Q

private sector

A

the part of the economy that is owned by individuals

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25
Productivity
Output per unit of input employed
26
Public sector
The part of the economy where production is organised by the state or goverment
27
Tertiary sector
Industry's involved in the production of services
28
Macroeconomics
The study of economics as a whole
29
Microeconomics
The study of individuals behaviours
30
total utility
the amount of satisfaction a person derives from the total amount of a product consumed
31
marginal utility
The additional satisfaction a person derives from the total amount of product consumed
32
Market
A place where buyers and sellers meet and goods and services are exchanged
33
Prices causes what in a graph?
Movement
34
A change in Demand and supply causes what in a graph
Shift
35
Equilibrium
A balance between concepts
36
External benefit
An action someone does that benefits a third party (non involved)
37
Price signals
The information that markets generate to guide the distribution of resources
38
unintended consequences
This is where government intervention creates unintended consequences
39
Excessive admin costs
The cost of correcting market failure outweighs the benefits
40
Information gaps
When a government doesn't have enough information to make a decision. Or the information can be misleading
41
Conflicting objectives
This is where government want multiple things however doing one eliminates the chance of doing another
42
Politicians maximising their own welfare
Politicians suggesting polices that benefit themselves selves over the citizens
43
Market failure
When resources are inefficiently allocated
44
government failure
occurs when government intervention leads to a net welfare loss compared to the free market solution
45
Public choice theory
theories about how and why public spending and taxation decisions are made
46
rent seeking
using political influence to increase one's economic profits at the expense of others
47
consumer surplus
the amount a buyer is willing to pay for a good minus the amount the buyer actually pays for it
48
producer surplus
The difference between the market price which firms receive and the price at which they are prepared to supply
49
Incentive function of the price mechanism
when changes in price encourage buyers and sellers to change the quantity they buy and sell
50
Rationing function of the price mechanism
When changes in price lead to more or less being produced, so increasing or limiting the quantity demanded by buyers
51
Signalling function of the price mechanism
When changes in price give information to buyers and sellers which influence their decisions to buy and sell
52
medium of exchange (functions of money)
Allows goods and services to be exchanged without double convenience of wants
53
standard of deferred payment (functions of money)
Paying for something in the future
54
A store of value (functions of money)
Can be saved and used in the future
55
Unit of account (function of money)
Comparison of goods and services
56
Ad valorem
tax is that it is proportional to the value of the underlying asset
57
Specific tax
tax that is given as a fixed rate for each unit of a good or service
58
Productive efficiency
Production takes place at lowest cost
59
Allocatively efficient
occurs when social welfare is maximised
60
Private cost or benefit
The cost or benefit of a action to firms or consumers
61
Negative externality
If net social cost is greater then net private cost
62
Positive externality
If net social benefit is greater then net private benefit
63
Social cost or benefit
The cost or benefit of an activity to socity
64
Specialisation
Concentrating on producing certain goods and services and becoming more efficient
65
Social cost
Private cost + external cost
66
Negative externalities (welfare loss triangle) Direction
Facing right
67
Positive externalities (welfare loss triangle) Direction
Facing left
68
Non-rivalrous
No limit to the amount of people consuming the good
69
Non-excludable
Cannot stop a person or group using good
70
Free rider problem
Someone using a public good without contributing or not contributing enough
71
Pure public good
Non rivalrous and non excludable (traffic lights)
72
Symmetrical information
Both party’s in a transaction have the same level of knowledge
73
Changes in demand -PASIFIC
-Population -advertising -season -income -fashion -Interest -competition
74
Changes in supply -PINTS WC
-productivity -indirect taxes -no of firms in the market -Technology -subsides
75
PED
%change in demand —————————— %change in price
76
PES
%change in supply ————————— %change in price
77
XED
%change in quantity in demand for good A ——————————— %change in price of good B
78
YED
%change in demand —————————- %change in income
79
Inferior goods
Income goes up demand falls Negative YED
80
Normal goods
Income goes up so does demand (Positive YED)
81
Luxury
YED of greater then 1
82
Necessities
YED of less then 1
83
AD formula
C+I+G+(X-M)
84
Consumption on a graph
DOWN
85
Production on a graph
UP
86
Substitute
Positive XED
87
Complement
Negative XED
88
Command economy
-Most resources are allocated by the state, the market has little to no part to play
89
Mixed economies
-More resources are allocated though state planning then in free market economies
90
Free market economies
-The majority of resources are allocated through markets then the state
91
Changes in PED - SPLAT
-substitutions -proportion of Y -luxury -addictive -time
92
Changes in PES- PSSST B
-production lag -stock -spare capacity -substitute ability if the factors of production -technology -barriers to entry
93
Interest rate
How much credit costs when borrowing from a bank
94
Balanced government budget
When government receipts are the same as government spending
95
Hysteresis unemployment
The longer you’ve been unemployed the less likely you are to get back into work
96
State provision
Direct provision of goods and services by the government free at the point of consumption

Econmics (5 decks)

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