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tiny 2 Flashcards

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1
Q

substitutes

A

g&s that can replace each other to satisfy the same/similar need

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2
Q

complements

A

g&s that tend to be used together to satisfy a particular want

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3
Q

competitive supply

A

compete for use of same resources
producing one implies decrease in other
supply

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4
Q

joint supply

A

produced in same production process

not possible to produce more of one without producing more of other

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5
Q

inferior g&s

A

g&s where demand falls as income increases

more affordable substitutes for more expensive g&s

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6
Q

normal/superior g&s

A

g&s where demand increases as income increases

luxury g&s not deemed a necessity for living

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7
Q

supply shocks

A

sudden and unpredictable events that affect supply

can be beneficial/adverse

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8
Q

price control

A

the setting of market P by gov so P are unable to adjust back to their problematic equilibrium level determined by D and S

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9
Q

unit tax

A

a specific amount of tax is imposed on each unit of a g&s

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10
Q

externality

A

consumption or production that gives rise to pos or neg effects on others whose interests are not taken into consideration

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11
Q

negative externality

A

action exerts negative effects known as external cost on third parties but no compensation is paid
divergence between private and social cost

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12
Q

positive externality

A

action exerts positive effects known as external benefits on third parties but no payment received
divergence between private and social benefit

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13
Q

private cost

A

cost borne by economic agents taking action

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14
Q

external cost

A

cost borne by other economic agents (non-decision makers)

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15
Q

social cost

A

cost borne by society as a whole

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16
Q

private good

A

rivalrous and excludable in consumption

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17
Q

impure public good

A

non-rivalrous and excludable in consumption

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18
Q

excludable

A

can prevent people from consuming the g&s once it has been produced
usually done by charging a price for the g&s

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19
Q

free-rider problem

A

once the g&s are produced, consumers who have not paid can still enjoy the benefits of public g&s

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20
Q

production possibility curve

A

show all max combo of g&s that can be produced by an econ in a given period of time when all resources are fully and efficiently utilised
ceteris paribus: state of tech is fixed
show potential output

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21
Q

scarcity

A

problem that arises when we want more than we have

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22
Q

opportunity cost

A

highest-valued option forgone

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23
Q

what to produce

A

choice of the types and quantities of g&s to produce

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24
Q

how to produce

A

choice of production methods

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25
for whom to produce
who can enjoy how much of g&s
26
circular flow
visualise and understand how a nation’s overall econ works and how the flow of money goes
27
injections
money flows pumped into the econ
28
leakages
money flows leaked out of the econ
29
investment
the expenditure by firms on capital to produce more g&s
30
demand
various planned Q a consumer is willing and able to buy at different possible P in a period of time, ceteris paribus
31
quantity demanded
Q of a g&s a consumer is willing & able to buy at a particular P
32
law of demand
when P increases, Qd decreases, vice versa, ceteris paribus
33
supply
various planned quantities a producer is willing & able to produce & supply to market at different possible price in a period of time, ceteris paribus
34
quantity supplied
Q of a g&s a producer is willing & able to produce and supply at a particular P
35
law of supply
when P increases, Qs increases, vice versa, ceteris paribus
36
market equilibrium
no tendency to change Pe: Qs = Qd Qe: Q at Pe
37
quantity transacted
actual Q bought & sold
38
price mechanism
the process by which P increase or decrease as a result of changes in D and S coordinates consumption and production decisions as an invisible hand
39
shortage
excess D | Qd >>> Qs
40
surplus
excess S | Qd <<< Qs
41
market
where producers and consumers take place to exchange g&s
42
competitive market
a market with many individual and small sellers and buyers no one in the market have the power to influence P of g&s P affected by D and S
43
marginal benefit
extra benefit from consuming additional unit of good | downward-sloping bc consumers are willing to pay less for each additional unit
44
consumer surplus
pos diff between maximum amount willing to pay and amount actually paid
45
marginal cost
firms’ extra cost of producing additional unit of g&s | upward-sloping because each unit more costly than the last
46
producer surplus
positive difference between amount actually received and minimum amount willing to accept
47
social surplus
CS + PS
48
allocative efficiency
achieved when market allocates resources so no one can be better off without making someone else worse off MB = MC
49
welfare loss
loss of SS in society when resources are not allocated efficiently
50
price elasticity of demand
measures the responsiveness of Qd to a change in its P | % change in Qd/% change in P
51
price elasticity of supply
measures the responsiveness of Qs to a change in its P | % change in Qs/% change in P
52
indirect taxes
taxes on spending on g&s paid partly & indirectly by consumers but paid to gov by producers suppliers can shift tax burden to consumers by ↑ P
53
free market
P of g&s freely determined by D and S
54
government intervention
any action carried out by gov that affects market econ with the objective of impacting consumption and production decisions
55
price ceiling
legal maximum price set by the gov below the equilibrium price that producers can charge on a g&s
56
price floor
legal minimum price set by the government above the equilibrium price that producers should charge on a g&s
57
subsidy
financial assistance from the government
58
socially-optimum outcome
no externalities MPB = MPC and MSB = MSC no difference between benefits to consumers and to society and costs to producers and to society allocative efficiency achieved
59
market failure
failure of the market to allocate resources efficiently
60
demerit good
g&s considered to be undesirable to consumers | over-provided by free market
61
negative externalities of consumption
external cost created by consumers in consumption process of g&s that result in negative effect on third parties
62
merit good
g&s considered to be desirable by consumers | under-provided by free market
63
positive externalities of consumption
external benefit created by consumers in consumption process of g&s that result in positive effect on third parties
64
marginal private cost
cost to producers of producing 1 more unit of g&s
65
marginal social cost
cost to society of producing 1 more unit of g&s
66
marginal private benefit
benefit to consumers from consuming 1 more unit of g&s
67
marginal social benefit
benefit to society from consuming 1 more unit of g&s
68
negative externalities of production
external cost created by producers in production process
69
positive externalities of production
external benefit created by producers in production process
70
carbon tax
tax per unit of carbon emissions
71
tradable permits
policy involving permits to pollute issued to firms by the government
72
government regulation
policy implemented by the government to limit consumption or production activities
73
education
used to persuade and inform consumers and change their consumption patterns by raising awareness (through advertising)
74
common access resources
resources that unowned by anyone | available for anyone to use without payment
75
sustainability
needs of the present are met without decreasing the ability of future generations to meet their own needs
76
rivalrous
one’s consumption of g&s reduce amount available for others
77
non-excludable
not possible to exclude people from using resource | used abundantly without restriction → resources overused, degraded and depleted
78
tragedy of commons
occurs in shared-resource system where individual users act independently according to own self-interest
79
public good
non-rivalrous & non-excludable in consumption
80
allocative inefficiency
MB > MC: underproduction MB < MC: overproduction welfare loss exist
81
ceteris paribus
keeping all other factors equal
82
consumption
spending by households on consumer g&s over a period of time
83
human capital
skills, abilities, knowledge and good levels of health of labour
84
capital
the FoP that comes from investment in physical and human capital
85
entrepreneurship
the FoP involving organising and risk-taking | recognising the possibility of gain from employing a combination of other FoPs in a specific way
86
factors of production
the 4 resources that allow an economy to produce its output: land, labour, capital and entrepreneurship
87
firms
the productive units in the econ that turn FoP into g&s
88
income elasticity of demand
a measure of the responsiveness of the D for a g&s to a change in income
89
labour
the human FoP | the physical and mental contribution of the existing work force to production
90
land
the physical FoP | consists of natural resources, some of which are renewable and some of which are non-renewable
91
perfectly elastic demand
an increase in the P of a g&s leads to a fall in the Qd of the g&s to zero infinity
92
perfectly elastic supply
a fall in the P of a g&s leads to a fall in the Qs of the g&s to zero infinity
93
perfectly inelastic demand
a change in the P of a g&s leads to no change in the Qd of the g&s 0
94
perfectly inelastic supply
a change in the P of a g&s leads to no change in the Qs of the g&s 0
95
primary commodities
raw materials that are produced in the primary sector
96
primary sector
extracts or harvests products directly from natural resources in order to produce raw materials or food
97
total revenue
the aggregate revenue gained by a firm from the sale of a particular Q of output P x Qt
98
unitary elastic demand
a change in the P of a g&s leads to an equal and opposite proportional change in the Qd of the g&s 1
99
unitary elastic supply
a change in the P of a g&s leads to an equal proportional change in the Qs of the g&s 1
100
income
flow of earnings from using labour to produce g&s | wages and salaries are the factor reward to labour

capitalism (4 decks)

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