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Economics Definitions > Micro Definitions > Flashcards

Micro Definitions Flashcards

1
Q

Consumer

A

A person or organisation that directly uses a G/S.

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2
Q

Producer

A

A person/company/country that makes, grows or supplies G/S

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3
Q

Government

A

Political authority that decides how a country is run + manages operation

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4
Q

Good

A

Tangible product (seen, touched)

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5
Q

Service

A

Intangible product (not seen, touched)

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6
Q

Production

A

Total output of G/S produced by a firm or industry in a time period

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7
Q

Factors of Production

A

The resources in an economy that can be used to make G/S

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8
Q

Labour

A

(FoP) The workforce of an economy involved in production

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9
Q

Land

A

(FoP) Natural resources of an economy

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10
Q

Capital

A

(FoP) Human-made aids to production

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11
Q

Enterprise

A

(FoP) Risk of organising the other Factors of Production, taken by the entrepeneur.

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12
Q

Scarce resources

A

There is an insufficient amount of something to satisfy all wants

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13
Q

Unlimited wants

A

Infinite desire for something

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14
Q

Need

A

Consumer has to have it to survive

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15
Q

Want

A

Consumer would like to have, but inessential for survival

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16
Q

Economic problem

A

How to best use limited resources to satisfy unlimited wants of the people.

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17
Q

Opportunity Cost

A

Next best alternative given up when making a choice

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18
Q

Economic choice

A

An option for the use of selected scarce resources

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19
Q

Economic sustainability

A

Best use of resources to create responsible growth, now and in the future

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20
Q

Social sustainability

A

Impact of growth that promotes an improvement in quality of life for all, now and in the future

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21
Q

Environmental sustainability

A

Impact of growth where the effect on the environment is small and manageable, now and in the future

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22
Q

Market

A

Way of bringing together buyers and sellers to buy and sell G/S.

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23
Q

Free Market economy

A

Where scarce resources are allocates by supply and demand

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24
Q

Primary sector

A

Direct use of natural resources (extraction of raw materials from land and sea)

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25
Q

Secondary sector

A

Manufacturing or construction

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26
Q

Tertiary sector

A

Involve idea of a service

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27
Q

Factor Market

A

Services of FoP bought and sold (Labour market)

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28
Q

Product Market

A

Where final G/S are offered to consumers, businesses and the public sector.

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29
Q

Exchange

A

Giving up something the individual or firm has, for something they wish to have but don’t possess

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30
Q

Specialisation

A

Process by which individuals, firms, regions and economies concentrate on producing products that they are best at producing.

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31
Q

Division of Labour

A

Where workers specialise in one area of the production process.

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32
Q

Demand

A

Willingness & ability to purchase a G/S at the given price in a given time period

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33
Q

Law of Demand

A

Quantity demanded varies inversely with price

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34
Q

Individual Demand

A

Demand for a G/S by an individual consumer

35
Q

Market Demand

A

Total demand for a G/S (sum of individual demand)

36
Q

Movement along Demand Curve

A

When price changes, movement up/down demand curve

37
Q

Shift of the Demand Curve

A

Complete movement of the demand curve (right, left)

38
Q

Subsidy

A

Money the government gives to firms to encourage production and consumption

39
Q

Tax

A

Compulsory payment to the gov.

40
Q

Elastic demand

A

% Change in quantity demanded is GREATER than % change in price

41
Q

Inelastic demand

A

% Change in quantity demanded is LESS than % change in price

42
Q

Price elasticity of demand

A

Responsiveness of quantity demanded to a change in the price of product.

43
Q

Law of Supply

A

Quantity supplied varies directly with price

44
Q

Supply

A

Ability and willingness of firms to provide G/S at each price in a given time period

45
Q

Individual supply

A

The supply of a G/S by an individual producer

46
Q

Market supply

A

Total supply of a G/S (sum of individual supply)

47
Q

Movement along the supply curve

A

Price changes, movement up/down the supply curve.

48
Q

Shift of the supply curve

A

Complete movement of supply curve (right, left)

49
Q

Elastic supply

A

% change in quantity supplied GREATER than % change in price

50
Q

Inelastic supply

A

% change in quantity supplied LESS than % change in price

51
Q

Price elasticity of supply

A

Responsiveness of quantity supplied to a change in price

52
Q

Price

A

Sum of money paid for a G/S. Determined by interaction of supply and demand

53
Q

Efficiency

A

Optimal production and distribution of scarce resources

54
Q

Equilibrium price and quantity

A

Where quantity supplied matches quantity demanded

55
Q

Allocation of resources

A

How scarce resources are distributed among producers
How scarce G/S allocated among consumers

56
Q

Price determination

A

Interaction of demand and supply to find general level of price for a G/S.

57
Q

Market forces

A

Factors that determine PRICE LEVELS and the AVAILABILITY of G/S in an economy without gov. intervention.

58
Q

Competition

A

Different firms are trying to sell a similar product to a consumer

59
Q

Monopoly

A

One main producer of a G/S (25%+ of market share)

60
Q

Oligopoly

A

Small number of firms control majority of market share

61
Q

Profit

A

Amount of money a producer has left after all costs paid (Total Revenue > Total Cost)

62
Q

Productivity

A

Measure of degree of efficiency in use of Factors of Production in production process.

OUTPUT PER UNIT INPUT

63
Q

Average Cost (AC)

A

Cost of producing one unit

64
Q

Total Cost (TC)

A

All the costs of the firm added together

65
Q

Total Revenue (TR)

A

Total income of a firm from sales of G/S

66
Q

Average Revenue (AR)

A

Revenue per unit sold

67
Q

Loss

A

Total Revenue < Total Costs

68
Q

Economies of Scale

A

COST ADVANTAGES that the firm gains from increasing scale of production = FALL IN AVERAGE COSTS

69
Q

Labour Market

A

Where workers sell labour and employers buy labour.
Households = SUPPLY
Firms = DEMAND

70
Q

Supply of Labour

A

Total number of people who are WILLING AND ELIGIBLE to supply their labour (including unemployed)

71
Q

Gross pay

A

Amount of money an employee earns BEFORE DEDUCTIONS

72
Q

Income tax

A

Tax directly on personal income

73
Q

National Insurance

A

Contribution by workers and employers, towards the cost of BENEFITS

74
Q

Net pay

A

Amount of money employee left with after DEDUCTIONS

75
Q

Pension

A

Fixed amount paid at regular intervals to retirees, or their dependants.

76
Q

Money

A

Means of payment for G/S

77
Q

Medium of exchange

A

Anything that sets standard of value of G/S acceptable to ALL PARTIES IN TRANSACTION

78
Q

Financial sector

A

Financial organisations and their products. Involves flow of capital

79
Q

Investment

A

Purchase of capital goods (used to produce future G/S).
Asset purchased to provide income in future OR sold for profit

80
Q

Interest rate

A

Cost of borrowing money paid to bank
Reward of saving paid to saver

81
Q

Building society

A

Mutual financial institution owned by its MEMBERS. They receive deposits from members + lend money for property purchase.

82
Q

Mortgage

A

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

83
Q

Insurance company

A

Financial institution that guarantees compensation for loss, damage, illness, death in return for AGREED PREMIUM

Economics Definitions (2 decks)

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