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Microeconomics Y12 > Other Definitions > Flashcards

Flashcards in Other Definitions Deck (28)
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1
Q

Ad valorem tax

A

A tax levied on a commodity set as a percentage of the selling price

2
Q

Adverse selection

A

A situation in which a person at risk is more likely to take out insurance

3
Q

Allocative efficiency

A

Achieved when consumer satisfaction is maximised

4
Q

Buffer stock

A

A scheme intended to stabilise the price of a commodity by buying excess supply in periods when supply is high and selling when supply is low

5
Q

Capitalism

A

A system of production in which there is private ownership of productive resources, and individuals are free to pursue their objectives with minimal interference from the gov

6
Q

Comparative static analysis

A

Examines the effect on equilibrium of a change in the external conditions affecting a market

7
Q

Composite demand

A

Demand for a good that has multiple uses

8
Q

Composite supply

A

Where a product produced by a firm serves more than one market

9
Q

Cost efficiency

A

Appropriate combination of inputs of factors of production, given the relative prices of those factors

10
Q

Derived demand

A

Demand for a factor of production or a good which derives not from the factor or good itself but from the good it produces

11
Q

Economic efficiency

A

Where both productive and allocative efficiency have been reached

12
Q

Economies of scale

A

When an increase in the scale of production leads to production at lower long run average cost

13
Q

Excess burden of a sales tax

A

Deadweight loss to society following the imposition of a sales tax

14
Q

Firm

A

An organisation that brings together factors of production in order to product output

15
Q

Free-rider problem

A

When an individual cannot be excluded from consuming a good and thus has no incentive to pay

16
Q

Gross domestic product

A

Measure of the economic activity carried out in an economy during a period

17
Q

Incidence of a tax

A

The way in which the burden of paying a sales tax is divided between buyers and sellers

18
Q

Inferior good

A

Quantity demanded decreases in a response to an increase in consumer income

19
Q

Internalising an externality

A

An attempt to deal with an externality by bringing an external cost or benefit into the price system

20
Q

Invisible hand

A

Term used by Adam smith to describe the way in which resources are allocated in a market economy

21
Q

Joint demand

A

Demand for goods which are interdependent, such that they are demanded together

22
Q

Joint supply

A

Where a firm produces more than one product together

23
Q

Macroeconomics

A

Study of interrelationships between economic variables at an aggregate level

24
Q

Microeconomics

A

Study of the economic decisions taken by individual economic agents including households and firms

25
Q

Pareto optimum

A

An allocation of resources is said to be Pareto optimum if no reallocation of resources can make an individual better off without making some other individual worse off

26
Q

Resource allocation

A

The way in which a society’s productive assets are used amongst their alternative uses

27
Q

Sunk goods

A

Costs incurred by a firm that cannot be recovered if the firm ceased trading

28
Q

Technical efficiency

A

Attaining the maximum possible output from a given set of inputs