Theme 1 Definitions MR SLATTERY Flashcards
(33 cards)
normative statement
statement that are value based and involve opinions
positive statement
a statement which can be supported either by evidence or facts
capital goods
production equipment
consumer goods
finished goods
production possibility frontier (ppf)
maximum possible output combinations of two goods
specialisation
process of becoming an expert in a particular area
division of labour
separating workers into different tasks in order to improve efficiency
productivity
controlling your inputs and maximising your outputs
country specialisation
when a country specialises its resources into producing a limited range of goods and services
absolute advantage
being able to produce more of something than another country
comparative advantage
being able to produce something at a much lower opportunity cost than another country
opportunity cost
loss of an alternative when another alternative is chosen
producer surplus
difference between the amount that the producer is willing to be paid to supply and the actual amount they receive
consumer surplus
difference between the amount the consumers are willing to pay and the total amount that they actually pay
direct tax
tax imposed on income or profits of a person
indirect tax
tax imposed on goods and service
flat tax
tax imposed on firms
ad valorem tax
A unit tax (%)
negative externalities
when a third party is negatively affected by market transactions
positive externalities
when a third party is positively affected by market transactions
information campaign
powerful tool for raising awareness about important issues, causes or initiatives
subsides
direct payment that governments provide businesses to offset some of their operating costs
maximum pricing
when a price is set which the market won’t be allowed to go above
minimum pricing
setting a floor price which the market isn’t allowed to go beneath
