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A Level Economics > Micro Year 1 > Flashcards

Micro Year 1 Flashcards

1
Q

Ceteris paribus

Theme 1.1 Economics as Social Science

A

All things being equal; the assumption that, whilst the effects of a change in one variable are being investigated,a ll the other variablels are kept contsant

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2
Q

Law

Theme 1.1 Economics as Social Science

A

A thoery or model whihc has been verifited by empirical evidence

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3
Q

Normative economics

Theme 1.1 Economics as Social Science

A

The study and presnetioan of policy prescriptions invovling value judgements about the way in whihc scare resouces are allocated

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4
Q

Normatitve Statement

Theme 1.1 Economics as Social Science

A

A statement whihc cannot be supported or refuted because it is a value judgement

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5
Q

Positive Economics

Theme 1.1 Economics as Social Science

A

The scientific or objective study of the allocation of scare resources

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6
Q

Positive Statement

Theme 1.1 Economics as Social Science

A

A statement which can be supported or refuted by evidence

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7
Q

Scientific Method

Theme 1.1 Economics as Social Science

A

A method which subjects theories or hypotheses to falsification by empirical evidence

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8
Q

Social Science

Theme 1.1 Economics as Social Science

A

The study of societies and human behaviour using a variety of methods, including the scientific method

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9
Q

Theory or model

Theme 1.1 Economics as Social Science

A

A hypothesis which is capable of refutation by empirical

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10
Q

Base Period

Economic Data

A

The period, such as a year or a month, with which all other values in a series are compared

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11
Q

Index number

Economic Data

A

An indicator showing the relative valye of one number to another from a base of 100. It is often used to present an average of a number of statistics

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12
Q

Nominal values

Economic Data

A

Values unadjusted for the effects of inflation (i.e values at current prices)

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13
Q

Real values

Economic Data

A

Values adjusted for inflation (i.e. values at a constant price)

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14
Q

Basic economic problem

Theme 1.1.3 - The Economic Problem

A

Resouces have to be allocated between competeing uses because wants are infinite whilst resoucres are scarce

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15
Q

Capital

Theme 1.1.3 - The Economic Problem

A

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

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16
Q

Choice

Theme 1.1.3 - The Economic Problem

A

Economic choice invovled the alternative uses of scare resources

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17
Q
A
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18
Q

Economic goods

Theme 1.1.3 - The Economic Problem

A

Goods that are scarce because their use has an opportunity cost

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19
Q

Entrepreneurs

Theme 1.1.3 - The Economic Problem

A

Indivduals who seek out profitable opportunites for production and take risks in attempting to exploit these

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20
Q

Enterprise or entrepreneurship

Theme 1.1.3 - The Economic Problem

A

As a factor of production is the seeking out of profitiable opportunites for production and taking risks in attempting to exploit these

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21
Q

Factors of Production

Theme 1.1.3 - The Economic Problem

A

The inputs to the production process: land, labour, capital and enterprise

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22
Q

Fixed capital

Theme 1.1.3 - The Economic Problem

A

Economic resource such as factories and hospitals whicha re used to transform working capital into goods and services

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23
Q

Free goods

Theme 1.1.3 - The Economic Problem

A

Goods that are unlimted in supply and which therefore have no opportunity cost

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24
Q

Human capital

Theme 1.1.3 - The Economic Problem

A

The value of the productive potential of an individual or group or wokers; it is made up of the skills, talents, eductation and trainign of an individual or group and represents the value of future earnings and production

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25
Q

Labour

Theme 1.1.3 - The Economic Problem

A

As a factor of production is the workforce

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26
Q

Land

Theme 1.1.3 - The Economic Problem

A

As a factor of production, is all natural resources

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27
Q

Needs

Theme 1.1.3 - The Economic Problem

A

The minimum that is necessary for a person to survive as a human being

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28
Q

Non-renewable resources

Theme 1.1.3 - The Economic Problem

A

Resources, such as coal or oil, which once exploited cannot be replaced

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29
Q

Non- sustainable resource

Theme 1.1.3 - The Economic Problem

A

A resource whihc can be economically exploited in such as a way that its stock being reduced over time

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30
Q

Opportunity cost

Theme 1.1.3 - The Economic Problem

A

The benefits forgone of the next alternative

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31
Q

Renewable resources

Theme 1.1.3 - The Economic Problem

A

Resources, such as fish stocks or forests, that can be exploited over and over again because they have the potential to renew themselves

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32
Q

Scarce resources

Theme 1.1.3 - The Economic Problem

A

Resources that are limited in supply so that choices have to made about their use

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33
Q

Sustainable resource

Theme 1.1.3 - The Economic Problem

A

Renewable resource that is being economically exploited in such a way that it will not diminish or run out

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34
Q

Wants

Theme 1.1.3 - The Economic Problem

A

Desires for the consumption of goods and services

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35
Q

Working or Circulating Capital

Theme 1.1.3 - The Economic Problem

A

Resources that are in the production system waiting to be transformed into goods or other materials before being finally sold to the consumer

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36
Q

Capital Goods

1.1.4 - Production Possibility Frontiers

A

Goods that are used in the production of other goods such as factories, offices, roads, machines and equipment

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37
Q

Consumer Goods

1.1.4 - Production Possibility Frontiers

A

Goods and services that are used ot people to satisify their needs and wants

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38
Q

Margin

1.1.4 - Production Possibility Frontiers

A

A point of possible change

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39
Q

Production Possibility Frontiers

1.1.4 - Production Possibility Frontiers

A

A curve which shows the maximum potential level of output of one good given a level of output for all others goods in the economy

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40
Q

Barter

1.1.5 - Specialisation and the division of labour

A

Swapping one good for another without the use of money

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41
Q

Capital Productivity

1.1.5 - Specialisation and the division of labour

A

Output per unit of capital employed

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42
Q

Division of Labour

1.1.5 - Specialisation and the division of labour

A

Specialisation by workers, who perform different tasks at different stages of production to make a good or service, in co-operation with other workers

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43
Q

Labour productivity

1.1.5 - Specialisation and the division of labour

A

Output per worker

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44
Q

Market

1.1.5 - Specialisation and the division of labour

A

Any convenient set of arrangements by which buyers and sellers communicate to exchange goods and services

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45
Q

Money

1.1.5 - Specialisation and the division of labour

A

Any item, such as a coin or a bank balence which fulfills four functions: A medium of exchange, a measure of value, a store of value and a method of deferred payment

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46
Q

Money subsititutes

1.1.5 - Specialisation and the division of labour

A

Anything which can be used as a medium of exchange but which are not stores of value. Examples are charge cards or credit cards

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47
Q

Primary sector

1.1.5 - Specialisation and the division of labour

A

Extractive and agricultural industries

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48
Q

Private sector

1.1.5 - Specialisation and the division of labour

A

The part of the economy owned by individuals, companies and charities

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49
Q

Productivity

1.1.5 - Specialisation and the division of labour

A

Output per unit of input employed

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50
Q

Secondary or manufacturing sector

1.1.5 - Specialisation and the division of labour

A

Industries involved in the production of goods, mainly manufactured goods

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51
Q

Specialisation

1.1.5 - Specialisation and the division of labour

A

A system of organisation where economic units such as households or nations are not self-sufficient but concentrate on producing certain goods and services and trading the surplus with others

52
Q

Sub-market

1.1.5 - Specialisation and the division of labour

A

A market which is a distinct and identifiable part of a larger market

53
Q

Tertiary or service sector

1.1.5 - Specialisation and the division of labour

A

Industries invovled in the proudction of services

54
Q

Command or planned or centrally planned economy

1.1.6 - Types of Economy

A

An economic system where government, through a planning process, allocates resources in society

55
Q

Economic system

1.1.5 - Specialisation and the division of labour

A

A complex network of individuals, organisations and institutions and their socail and legel interrelationships which allocates resources

56
Q

Free market economy

1.1.5 - Specialisation and the division of labour

A

An economic system that resolves the basoc economic problems mainly through the market mechanism

57
Q

Mixed Economy

1.1.5 - Specialisation and the division of labour

A

An economy where both the free market mechanisms and the government planning process allocate significant proportions of total resources

58
Q

Economic Welfare

1.2.1 - Rational decision making

A

The level of well-being or proesperity or living standards of an individual or group of individuals such as a country

59
Q

Macroeconomics

1.2.1 - Rational decision making

A

The study of the economy as a whole including inflation, growth and unemployment

60
Q

Microeconomics

1.2.1 - Rational decision making

A

The study of the behaviour of individuals or groups such as consumers, firms or workers, typically within a market context

61
Q

Neo-classical theory

1.2.1 - Rational decision making

A

A theory of economics which typically starts with the assumption that economic agents will maximise their benefots and act rationally, and which develops how resources will be allocated in markets and at what price through the forces of demadn and supply; the margin is a key concept in neo-classical theory

62
Q

Utility or economic welfare

1.2.1 - Rational decision making

A

The satisfaction or benefit derived from consuming a good or a set of goods

63
Q

Conditions of demand

1.2.2, 1.2.8 - Demand

A

Factors other than price, such as income or the price of other goods, which lead to changes in demand and are associated with shifts in the demand curve

64
Q

Consumer Surplus

1.2.2, 1.2.8 - Demand

A

The difference between how much buyers are prepared to pay for a good and what they actually pay

65
Q

Contraction of demand

1.2.2, 1.2.8 - Demand

A

When quantitiy demanded for a good falls because its price rises; it is shown by a movment up the demand curve

66
Q

Demand curve

1.2.2, 1.2.8 - Demand

A

The line on a price/quantity diagram which shows the level of effective demand at any given price

67
Q

Demand or effective demand

1.2.2, 1.2.8 - Demand

A

The quantity purchased of a good at any given price, given that other determinants of demadn remain unchanged

68
Q

Extension of demand

1.2.2, 1.2.8 - Demand

A

When quantitiy demanded for a good increases because its price falls; it is shown by a movement down the demand curve

69
Q

Law of diminishing marginal utility

1.2.2, 1.2.8 - Demand

A

The value or utility that individual consumers gain from the last product consumed falls the greater the number consumed. So the marginal utility of consuming the sixth product is lower than the second product consumed

70
Q

Shift in the demand curve

1.2.2, 1.2.8 - Demand

A

A movement of the whole demand curve to the right or left of the original caused by a change in any variavle affecting demand except price

71
Q

Elastic Demand

1.2.3 - Price elasticity of demand

A

Where the price elasticity of demand is greater than 1. The responsiveness of demand is proportioanlly greater than the change in price.D emadn is perfectly elastic if the price elasticaity of demand is infinity

72
Q

Inelastic demand

1.2.3 - Price elasticity of demand

A

Where the price elasticity of demadn is less than 1. The responsiveness of demadn is proportionally less than the change in price. Demand is perfectly inelastic if the price elasticity of demand is 0

73
Q

Price elasticity of demand

1.2.3 - Price elasticity of demand

A

The proportionate response of changes in quantity demanded to proportionate change in price, measured by the formula:

74
Q

Unitary elasticity

1.2.3 - Price elasticity of demand

A

Where the value of price elasticity of demand is 1. The responsiveness of demadn is proportionally equal to the change in price

75
Q

Total expenditure

1.2.3 - Price elasticity of demand

A

Quantity bought times the average price of a product

76
Q

Total revenue

1.2.3 - Price elasticity of demand

A

Quantity sold times the average price of a product

77
Q

Complement

1.2.3 - Income and cross elasticities

A

A good that is purchased with other goods to satisfy a want. Complements have a negative cross elasticity of demadn with each other

78
Q

Cross elasticity of demand

1.2.3 - Income and cross elasticities

A

A measure of the responsiveness of quantity demanded of one good to a change in the price of another good. It is measured by the equation:

79
Q

Income elasticity of demand

1.2.3 - Income and cross elasticities

A

A measure of the responsiveness of quantity demanded to a change in income. It is measured by the formula

80
Q

Inferior good

1.2.3 - Income and cross elasticities

A

A good where demand falls when income increases

Negative income elasticity of demand

81
Q

Normal good

1.2.3 - Income and cross elasticities

A

A good where demand increases when income increases

Positive inomce elasticity of demand

82
Q

Substitute

1.2.3 - Income and cross elasticities

A

A good which can be replaced by another to satisfy a want. Substitutes have a positve cross elasticiy of demand with each other

83
Q

Conditions of Supply

1.2.4, 1.2.5 - Supply

A

Factors other than price such as income or the price of other goods, which lead to changes in supply and are associated with shifts in the supply curve

84
Q

Long Run

1.2.4, 1.2.5 - Supply

A

The period of time whena ll factor inputs can be varied but the state of technology remains constant

85
Q

Price elasticity of supply

1.2.4, 1.2.5 - Supply

A

A measure of the responsiveness of quantity supplied to a change in price. It is measured using the equation

86
Q

Producer surplus

1.2.4, 1.2.5 - Supply

A

The difference betw2een the market price which firms recieve and the price at which they prepared to supply

87
Q

Short Run

1.2.4, 1.2.5 - Supply

A

The period of time when at least one factor input to the production process can be varied

88
Q

Supply

1.2.4, 1.2.5 - Supply

A

The quantitiy of goods that supplieres are willing to sell at any given price over a period of time

89
Q

Equilibrium Price

1.2.6 - Price Determination

A

The price at which there is no tendency to change because planned (or desired or ex ante) purchases (i.e. demand) are equal to planned sales (i.e. supply)

90
Q

Excess Demand

1.2.6 - Price Determination

A

Where demand is greater than supply

91
Q

Excess supply

1.2.6 - Price Determination

A

Where supply is greater than demand

92
Q

Free market forces

1.2.6 - Price Determination

A

Forces in free markets which act to reduce prices when there is excess supply and raise prices when there is excess demand

93
Q

Market-clearing price

1.2.6 - Price Determination

A

The price at which there is neither excess demand not excess supply but where everything offered for sale is purchased

94
Q

Incentive function

1.2.7 - The price mechanism

A

When changes in price encourage buyers and sellers to change the quantity they buy and sell. A rise in price encourages buyers to purchase less and sellers to produce more; and vice versa

95
Q

Rationing function

1.2.7 - The price mechanism

A

When changes in price lead to more or less being produced, so increasing or limiting the quantity demanded by buyers

96
Q

Signalling function

1.2.7 - The price mechanism

A

When changes in price give information to buyers and sellers whihc influence thier decisions to buy and sell

97
Q

Ad valorem tax

1.2.9 - Indirect taxes and subsidies

A

Tax levied as a percentage of the value of the good

98
Q

Incidence of tax

1.2.9 - Indirect taxes and subsidies

A

The tax burden of the taxpayer

99
Q

Specific or unit tax

1.2.9 - Indirect taxes and subsidies

A

Tax levied on volume

100
Q

Subsidy

1.2.9 - Indirect taxes and subsidies

A

A grant given which lowers the price of a good, usally designed to enoucrage production or consumption of a good

101
Q

Complete market failure

1.3.1 - Types of market failure

A

When a market fails to supply any of a good which is demanded, creating a missing market

102
Q

Market failure

1.3.1 - Types of market failure

A

Where resources are inefficiently allocated due to imperfections in the working of the market mechanisms

103
Q

Missing market

1.3.1 - Types of market failure

A

A market where the market mechanism fails to supply any of a good

104
Q

Partial market failure

1.3.1 - Types of market failure

A

When a market for a good exists but there is overproduction or underproduction of the good

105
Q

Consumption externalities

1.3.2 - Externalities

A

When the social costs of consumption are different from the priveate costs of consumption. If social benefits exceed private benefits, then there are positive consumption externalites. If social benefits are less than private benefits then there are negative consumption externalities

106
Q

Externality

1.3.2 - Externalities

A

It is a third party spill-over effect

107
Q

Marginal social and private costs and benefits

1.3.2 - Externalities

A

The social and private costs and benefits of the last unit either prodeuced or consumed

108
Q

Private cost adn benefit

1.3.2 - Externalities

A

The cost or benefit of an activity to an individual economci unit such as a consumer or a firm

109
Q

Production externalities

1.3.2 - Externalities

A

When the social costs of production are different from the private costs of production. If social costs exceed private costs, then there are negative production externalities. If social costs are less than private costs, then there are positive production externalities

110
Q

Social cost and benefit

1.3.2 - Externalities

A

The cost or benefit of an activity to society as a whole

111
Q

Free rider

1.3.3 - Public Goods

A

A person or organisation which receives benefits that other have paid for without making any contributions

112
Q

Non-excludability

1.3.3 - Public Goods

A

Once provided, it is impossibel to prevent any economic agent from consuming the good

113
Q

Non-rejectability

1.3.3 - Public Goods

A

Once provided, it is impossible for any economic agent not to consume the good

114
Q

Non-rivaly

1.3.3 - Public Goods

A

Consumption by one economic agent does not reduce the amount available for consumption by others

115
Q

Private good

1.3.3 - Public Goods

A

A good which possesses the characteristics of rivalry and excludability

116
Q

Public good

A

A good which possesses the characteristics of non-rivalry and non-excludabilty

117
Q

Quasi-public good

1.3.3 - Public Goods

A

A good which does not perfectly possess the characteristics of non-rivalry and non-excludability and yet which also is not perfectly rival or excludable

118
Q

Asymmetric information

1.3.4 - Information gaps

A

Where buyers and sellers have different amounts of information, with one group having more information than the other

119
Q

Imperfect information

1.3.4 - Information gaps

A

Where buyers or sellers or both lack information to make an informed decision

120
Q

Information failure/gap

1.3.4 - Information gaps

A

Where buyers or sellers or both don’t have the information that is available to make a decision

121
Q

Moral hazard

1.3.4 - Information gaps

A

When an economci agent makes a decision in their own best interest knowing that there are potential adverse risks, and that if problems result, the cost will be partly borne by other economic agents

122
Q

Principal-agent problem

1.3.4 - Information gaps

A

Occurs when the goals of principals, those standing gain or lose from a decision, are different from agents those making decisions on the behalf of the principal. E.g. shareholders (principles) and managers (agents)

123
Q

Cap and trade schemes

1.4.1 - Government intervention in markets

A

Schemes which set a limit on a particular type of pollution, and then issue pollution permits to the total of that limit which can be bought and sold between firms which pollute

124
Q

Trade pollution permit

1.4.1 - Government intervention in markets

A

A permission issued, usually by a government, to allow a fixed amount of pollution to be created; this permit can be used by the owner or sold to another firm

125
Q

Government failure

1.4.2 - Government failure

A

Occurs when government intervention leads to a net welfare loss compared to the free market solution

126
Q

Public choice theory

1.4.2 - Government failure

A

Theories about how and why public spending and taxation decisions are made

127
Q

Rent-seeking

1.4.2 - Government failure

A

The use of political power by an economic agent to manipulate the distribution of resources for their own benefit at the expense of others without creating any extra wealth for society

A Level Economics (6 decks)

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