Brainscape's Knowledge GenomeTM


Top Flashcards (Certified)
All Flashcards

Economics > Theme 1 Definitions > Flashcards

Theme 1 Definitions Flashcards

(72 cards)

Start Studying
1
Q

What does ceteris paribus mean?

A

The effect of one economic variable on another

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

What does a normative statement mean?

A

Statement which are value based and involve opinion

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

What does a positive statement mean?

A

A statement which can be supported either evidence and facts

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

What does the law of diminishing marginal utility mean?

A

As the amount consumed increases, the utility derived by the consumer decreased

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

What does total utility mean?

A

The total satisfaction from a given level of consumption

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

What does marginal utility mean?

A

The change of satisfaction from consuming an extra unit

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

What does capital goods mean?

A

Production equipment

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

What does consumer goods mean?

A

Finished good

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

What does production possibly frontier (PPF) mean?

A

The maximum possible output combinations of two goods

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

What does specialisation mean?

A

The process of becoming an expert in a particular area

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

What does division of labour mean?

A

Separating workers into different tasks in order to improve efficiency

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

What does productivity mean?

A

Controlling your inputs and maximising your outputs

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

What does country specialisation mean?

A

When a country specialises its resources into producing a limited range of goods and services

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

What does absolute advantage mean?

A

Being able to produce more of something than another country

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

What does comparative advantage mean?

A

Being able to produce something at a much lower opportunity cost than another country

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

What does opportunity cost mean?

A

The loss of an alternative when another alternative is chosen

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

What does producer surplus mean?

A

The difference between the amount that the producer is willing to be paid to supply and the actual amount they receive

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

What does consumer surplus mean?

A

The difference between the amount that consumers are willing to pay and the total amount that they actually pay

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

What does direct tax mean?

A

A tax imposed on income or profits of the person

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

What does indirect tax mean?

A

A tax imposed on goods and services

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

What does flat tax mean?

A

A tax imposed on firms

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

What does ad valorem tax mean?

A

A unit tax (%)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

What does free market mean?

A

An economic system based on supply and demand, with little or no government control

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
24
Q

What does centralised/command economy mean?

A

An economic system where the government makes decisions regarding the production and distribution of goods

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
25
What does mixed economy mean?
An economy organised with some free market elements and some socialist elements
26
What does demand mean?
Consumers desire to buy a product or service
27
What does supply mean?
The quantity of goods or services that producers are willing and able to sell at each possible price
28
What does equilibrium mean?
Where supply and demand meet
29
What does excess demand mean?
When the price of good is lower than the equilibrium price
30
What does excess supply mean?
When the quantity supplied of a product or service exceeds the quantity demanded at a given price
31
What does price elasticity of demand mean?
The responsiveness of demand to change in price
32
What does price elasticity of supply mean?
The responsiveness of supply to the change in price
33
What does elastic mean?
Demand drops when price increases
34
What does inelastic mean?
When price increases, demand stays the same
35
What does income elasticity mean?
The responsiveness of demand to the change in income
36
What does a normal good mean?
When income rises, demand also rises (and vice versa)
37
What does an inferior good mean?
When income rises, demand falls (and vice versa)
38
What does a luxury good mean?
When income rises, a bigger demand rise happens (and vice versa)
39
What does cross elasticity of demand mean?
The responsiveness of demand of one good to changes in price of a related good
40
What does merit goods mean?
A good that benefits the consumer
41
What does demerit goods mean?
A good that doesn’t benefit the consumer
42
What does negative externalities mean?
When a third party is negatively affected by market transactions
43
What does positive externalities mean?
When a third party is positively affected by market transactions
44
What does an information campaign mean?
A powerful tool for raising awareness about important issues, causes or initiatives
45
What does price mechanism mean?
The way price changes in response to changes in demand or supply
46
What does rationing function mean?
When supply is limited, its price increases, which can help reduce demand and allocate the available quantity to those who are willing and able to pay the higher price
47
What does signalling function mean?
The price of a good changes, this signals to the consumer or producer that they should change their level of consumption or production
48
What does incentive function mean?
Higher prices provides an incentive to existing producers to supply more but also more consumers to decrease demand
49
What does public goods mean?
A good which provided by one, benefits everyone
50
What does market failure mean?
The price mechanism fails to allocate scare resources efficiently leading to net social welfare loss
51
What does complete market failure mean?
Market simply doesn’t supply product at all
52
What does partial market failure mean?
Market does actually function but it produces either the wrong quantity or price
53
What does non-excludability mean?
The benefit derived from pure public goods cannot be confined solely to those who have paid for it
54
What does non-rival consumption mean?
Consumption by one consumers doesn’t restrict consumption by another consumer
55
What does non-rejectable mean?
The collective supply of a public goods cannot be rejected by people
56
What does free rider problem mean?
People benefit from goods or services without paying for it
57
What does asymmetric information mean?
When one individual has much information than another
58
What does information gap mean?
When a buyer or seller doesn’t have access to the information needs for them to make a fully information decision
59
What does quasi public good mean?
Near public good
60
What does principle agent relationship mean?
An arrangement in which one entity appoints another to act on its benefit
61
What does imperfect information mean?
When the economic agent lack information about a good or any other information relevant to the transaction
62
What does perfect information mean?
When the economic agents are perfectly informed when making their decisions
63
What does subsides mean?
Direct payment that governments provide businesses to offset some of their operating costs
64
What does maximum pricing mean?
When a price is set which the market will not be allowed to go above
65
What does minimum pricing mean?
Setting a floor price which the market is not allowed to go beneath
66
What does carbon trading mean?
Granting permits to emit a certain amount of carbon dioxide
67
What does carbon offsetting mean?
When a polluting company buy a carbon credit to make up for the greenhouse gas it has emitted
68
What does congestion charge mean?
A fee charged on most cars and motor vehicles being driven within the congestion charge
69
What does government failure mean?
Government intervention intended to correct failure, leads to inefficient resource allocation and market failure
70
What does government intervention mean?
Actions taken by the government to influence the economy, often to address market failures
71
What does rational behavior mean?
Decisions that individuals make that they believe will best serve their personal interest, taking into account resources and preferences
72
What does irrational behavior mean?
Decisions made without weighing then pros and cons or considering the potential consequences

Economics (10 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2025 Bold Learning Solutions. Terms and Conditions