Paper 1 Key Terms

Question 1

What is a consumer ?

Answer 1

A person or organisation that directly uses a good or service

Question 2

What is a producer ?

Answer 2

A person, company or country that makes, grows or supplies goods and services

Question 3

What is the government

Answer 3

A political authority that determines how a country is run

Question 4

What is a good ?

Answer 4

A tangible product that can be seen or touched

Question 5

What is a service ?

Answer 5

An intangible product that can’t be seen or touched

Question 6

What is profit ?

Answer 6

The amount of money a producer had left after all costs are paid

Question 7

What is the economic problem ?

Answer 7

How to best use limited resources to satisfy the unlimited wants for people. ( Unlimited wants, finite resources )

Question 8

What is the opportunity cost ?

Answer 8

The next best alternative given up when making a choice

Question 9

What should be considered when trying to reduce the economic problem ?

Answer 9

• how should goods and services be produced ?
• what should be produced ?
• for whom should goods and services be produced

Question 10

What is an economic choice ?

Answer 10

An option for the use of selected scarce resources

Question 11

What is economic sustainability?

Answer 11

Best use of resources in order to create responsible development or growth, now and into the future

Question 12

What is social sustainability?

Answer 12

The impact of development or growth that promotes an improvement in QOL for all, now and into the future

Question 13

What is environmental sustainability?

Answer 13

The impact of development or growth where the effect on the environment is small and possible to manage, now and into the future

Question 14

What is a market ?

Answer 14

A way of bringing buyers and sellers to buy and sell goods and service

Question 15

What is a market economy ?

Answer 15

An economy in which scarce resources are allocated by the market forces of supply and demand

Question 16

What is the primary sector ?

Answer 16

The direct use of natural resources including extraction of basic materials and goods from land and sea

Question 17

What is the secondary sector ?

Answer 17

All the activities in an economy concerned with either manufacturing or construction

Question 18

What is a product market ?

Answer 18

Where final goods and services are offered to consumers, businesses And the public sector

Question 19

What is the tertiary sector?

Answer 19

All activities in an economy that involve the idea of a service

Question 20

What is a factor market ?

Answer 20

Where the services of the factors of production are bought and sold

Question 21

What is specialisation ?

Answer 21

Process by which individuals firms,regions and countries concentrate on producing those products they are best at producing

Question 22

What is exchange?

Answer 22

The giving up of something that an individual or firm has in return for something they wish to have, but do not possess

Question 23

What is demand ?

Answer 23

The willingness and ability to purchase a good or service at the given price in a given period of time

Question 24

What is the law of demand ?

Answer 24

The quantity demanded varies inversely with price

Question 25

What is individual demand ?

Answer 25

The demand for a good or service by an individual consumer

Question 26

What is market demand ?

Answer 26

The total demand for a good or service found by adding together all individual demands

Question 27

What is a subsidy ?

Answer 27

A amount of money given by government tax or firms to encourage production and consumption

Question 28

What is PED?

Answer 28

The responsiveness of demand to a change on price

Question 29

What is elastic demand ?

Answer 29

When the percentage change in quantity demanded is greater than the percentage change in price

Question 30

What is inelastic demand ?

Answer 30

When the percentage change in quantity demanded is less than the percentage change in price

Question 31

What is supply ?

Answer 31

The ability and willingness of firms to provide goods and services at each price in a given time

Question 32

What is the law of supply ?

Answer 32

The quantity supplied varies directly with price

Question 33

What is individual supply ?

Answer 33

Supply of a good or service by an individual producer

Question 34

What is market supply ?

Answer 34

The total supply of a good or service found by adding all individual producers supply

Question 35

What is PES?

Answer 35

The responsiveness of quantity supplied to a change in price of the product

Question 36

What is elastic supply ?

Answer 36

When the percentage change in quantity supplied is greater than the percentage change in price

Question 37

What is inelastic supply ?

Answer 37

When the percentage change in quantity supplied is less than the percentage change in price

Question 38

What is price ?

Answer 38

The sum of money which has to be paid for a good or service

Question 39

What is equilibrium price and quantity

Answer 39

Where the quantity supplied exactly matches the quantity demanded

Question 40

What is the determination of price ?

Answer 40

The interaction of the market forces of demand and supply to establish the general level of prices for a good or service

Question 41

What are market forces ?

Answer 41

The factors that determine price levels and the ability of goods and services in an economy without government intervention

Question 42

What is competition?

Answer 42

Where different firms are trying to sell a similar product to a consumer

Question 43

What is a monopoly?

Answer 43

A sole producer of a product where one producer has 25% or more of the market

Question 44

What is an oligopoly?

Answer 44

It is where a small number of firms control the majority of the market share, if the 5 largest firms control over 50% of the market

Question 45

What is productivity ?

Answer 45

The output per unit of input

Question 46

What is production ?

Answer 46

The total output of goods and services produced by a firm or an industry in a period of time

Question 47

What is total cost ?

Answer 47

All the costs added together

Question 48

What is the average cost ?

Answer 48

The cost of producing a unit of output

Question 49

What is the total revenue?

Answer 49

The total income of the firm from the sale of its goods and services

Question 50

What is the average revenue?

Answer 50

The revenue per unit sold

Question 51

What is a loss ?

Answer 51

When a firms revenue is less than its costs

Question 52

What are economies of scale ?

Answer 52

The cost advantages a firm can gain by increasing the scale of production

Question 53

What is a labour market ?

Answer 53

Where workers sell their labour and employers buy the labour

Question 54

What is gross pay ?

Answer 54

The amount of money that an employee earns before deductions

Question 55

What is net pay ?

Answer 55

The amount of money earned after deductions

Question 56

What is income tax ?

Answer 56

A tax levied on personal income

Question 57

What is national insurance?

Answer 57

A contribution paid by workers and their employers towards the cost of state benefits

Question 58

What is pension ?

Answer 58

A fixed amount paid at regular intervals to a person or their surging dependants

Question 59

What is money ?

Answer 59

Anything that is acceptable as a means of payment for goods and services

Question 60

What is a medium of exchange?

Answer 60

Anything that sets the standard of value is good and services acceptable to all parties involved in a transaction

Question 61

What is a building society?

Answer 61

Mutual financial organisations that are owned by their members

Question 62

What is a bank ?

Answer 62

Financial institutions licensed to receive deposits and make loans

Question 63

What is the financial sector?

Answer 63

Consist of financial organisations and their products and involves the flow of capital