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99 Cards in this Set
- Front
- Back
Commodity |
A good, usually referee to as raw goods or semi-manufactured goods, unbranded and indistinguishable from each other |
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Competetion |
A market situation in which there are a large number of buyers |
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Complementary goods |
Goods that are consumed together like DVD's and DVD players |
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Complete market failure |
Where the market fails to provide a product at all |
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Composite demand |
A good that is demanded for more than one purpose so that demand for one product reduces supply for the other purpose |
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Contraction in supply |
When the amount offered for sale is reduced because the price has fallen |
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Contractions in demand |
Falls in the quantity demanded of a good caused by an increase in price |
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Demand |
The amount that consumers are willing and able to buy at each price level |
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Demerit good |
A good that would be over-consumed in a free market, brings less overall benefit to consumers than they realise |
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Deregulation |
The process of removing government controls from market |
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Derived demand |
When the demand for one good or service comes from the demand from another good or service, demand for cars stimulates the demand for steel |
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Discoraged workers |
Workers who leave the labour market because despite numerous attempts they are unable to find a job |
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Diseconomies of scale |
Where an incense in the scale of production lease to an increase in average total costs for firms |
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Disequlibrium |
A situation within the market where supply does not equal demand |
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Division of labour |
Breaking the production process down into a sequence with workers assigned to particular tasks |
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Economic goods |
Goods that are scarce and therfore have an opportunity cost |
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Economies of scale |
Where an increase in the scale of production leads to reductions in average total costs for firms |
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Effective demand |
Demand supported by the ability to pay for a good or service |
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Equilibrium |
The price at which demand is equal to supply and there is no tenancy for change |
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Excess demand |
When demand is greater than supply at a given price |
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Excess supply |
When supply at a particular price is greater than demand this should signal to producers to lower prices |
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Extension in supply |
When there is an increase in supply because the market price has risen |
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Extensions in demand |
Increases in demand caused by changes (falls) in price |
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Externalities |
Costs of benefits that spill over to third parties external to a market transaction |
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Factor market |
The market for the factors of production that make other goods and services |
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Failure of information |
Where economic agents do not properly percieve the benefits or disadvantages of a transaction |
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Fixed costs |
Costs of production that do not vary as output changes |
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Free goods |
Goods that have no opportunity cost in supply |
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Free-rider problem |
Where some consumers benefit from other consumers purchasing a good, particularly in the case of public goods |
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Geographial immobility |
Where workers find it difficult to move to where employment opportunities may be, due to family ties and differences in housing costs |
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Goods and services |
Goods are considered to tangible products that are physical where as services are not tangible |
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Government failure |
When government intervention to correct market failure does not improve the allocation of resources or leads to a worsening of the situation. |
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Human capital |
The skills, abilities, motivation and knowledge of labour. Shift the PPF to the right. |
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Incidenice of tax |
Proportion of tax that is passed onto the consumer, when demand is price inelastic the incidence of tax tends to be high. |
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Income |
A flow of earnings to a factor of production over a period of time. Eg, wages or salaries. |
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Income elasticity of demand |
The proportion to which demand is effected by a chance in incomes. % change in incomes ÷ % change in demand |
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Indirect tax |
A tax that doesn't directly effect spending. |
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Inferior good |
Goods or services that have lower demand when incomes are higher. Negative income elasticity of demand. |
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Investment good |
A good that increases in value after a period of time |
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Invisibles |
Intangibles such as the provision of insurance and banking services. |
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Joint supply |
When the production of one good also results in the production of another. Eg cows provide milk beef and leather |
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Marginal external benefit |
The spillover benefit to third partys of an economic transaction |
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Marginal external cost |
The spillover cost to third parties of an economic transaction |
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Marginal probate benefit |
The benefit to an individual or firm of an economic transaction |
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Marginal private cost |
The cost to an individual or firm as a result of an economist transaction |
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Marginal social benefit |
The full benefit to society of an economic transaction, MEB+MPB |
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Marginal social cost |
The full cost to society of an economic transaction, MEC+MPC |
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Market clearing price |
The price at which all goods that are supplied will be demanded |
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Market demand |
Total demand in a market for a good, the sum of all individuals' demand, at each given price. |
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Market failure |
Where the market fails to produce what consumers require at the lowest possible cost |
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Market mechanism |
The interaction of the forces of supply and demand, leading to an equlibrium price and quantity of a product. |
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Market supply |
the sum of all individuals' supply curve at each given price |
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maximum price |
a price ceiling above which the price of a good or service is not allowed to increase, must be below the equlibrium to work. |
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merit good |
a good that would be under-consumed in a free market, as individuals do not fully perceive the benefits obtained from consumption. |
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Minimum price |
a price floor below which the price of a good or service cannot decrease, must be above equlibrium to have any effect. |
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monopoly |
a market structure dominated by a single seller of a good. |
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negative externatities |
costs imposed on a third party not involved with the consumption or production of a good. |
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normal goods |
goods or services that will see an increase in demand as incomes rise |
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occupational immobility |
when workers may find it difficult to secure new jobs simply because the lack the requires skills and training |
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opportunity cost |
the next best alternative forgone when an economic decision is made. |
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partial market failure |
where the free market provides a product but with a misallocation of resources |
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planned supply |
the amount producers plan to produce at each given price |
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pollution permit |
a permit sold to firms by the government, allowing them to pollute up to a certain limit |
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positive externality |
a positive spillover effect to third parties of a market transaction |
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price elasticity of demand |
the responsiveness of demand according to changes in the price level. % change in quantity demanded divided by % change in price |
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private good |
a good that is exclude and rival in consumption |
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product markets |
markets in which all kinds of goods and services are traded. |
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production |
the process that converts factor inputs to outputs of goods and services |
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productive efficiency |
when a firm operates at minimum average total cost, producing the maximum possible outputs from inputs into the production process. |
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productivity |
the measure of efficiency, measuring the ratio of inputs to outputs, the most common measure is labor productivity, which is the output per worker per time period (often per hour) |
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profit |
when total income or revenue for a firm is greater than total costs |
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public good |
a good which posesses the characteristics of being non-excludable and non-rivalry in consumption |
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renewable goods |
goods that are able to be replenished over time unlike oil, gas and coal resources |
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specialisation |
the production of a limited range of goods by an individual factor of production or firm or country, in cooperation of others so that together a complete set of goods is provided |
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stock |
a quantity measured at a particular point in time |
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subsidies |
payments by government to producers to encourage production of a good or service. often associated with farmers and help to reduce prices paid by consumers and outputs are higher. |
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substitutes |
goods that will be used as an alternative to another good, for example mars and snickers, train and bus. These goods have a positive cross price elasticity of demand. |
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supply |
the amount offered for sale at each given price. |
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total factor productivity |
the overall productivity of inputs used by a firm in producing a particular level of output |
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trade union |
an organisation of workers set up to negotiate on wages, working hours and working conditions with employers on behalf of its workers |
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variable costs |
costs of production that may vary with output |
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visibles |
exports or imports that are tangible and that you can see and touch as it crosses international boundaries |
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wealth |
a stock of owned assets eg, housing property, savings and shares |
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weighting |
where a commodity is given a weighting proportional to its importance in the general pattern of consumer spending |
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perfectly inelastic |
where an elasticity measure is 0. Where output is not at at all effected by prices. Shown by a vertical curve |
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perfectly elastic |
where an elasticity measure is infinity, where a change in price results in the god no longer being demanded at all. shown by a horizontal curve |
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Market clearing price |
The price at which all goods that are supplied will be demanded. |
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Market demand |
Total demand in a market for a good, the sum of each individuals demand at each given price. |
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Market failure |
Where the market fails to produce what consumers require at the lowest possible cost |
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Market mechanism |
The interaction of the forces of supply and demand, leading to an equilibrium price and quantity for a product |
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Market supply |
The sum of all individual firm's supply curves at each given price |
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Maximum price |
A price ceiling above which the price of a good or service is not allowed to increase. Must be below equlibrium to have an effect. |
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Merit good |
A good that would be under-consumed in a free-market as individuals do not fully percieve the benefits obtained from consumption |
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Minimum price |
A price floor below which a good or service is not allowed to increase, to have any effect it must be above equlibrium |
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Monopoly |
A market structure dominated by a single provider of a good |
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Negative externalities |
Costs imposed onto third parties not involves In the production or consumption of a good. |
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Normal goods |
Goods or services that wI'll see an increase in demand when incomes rise. Have a positive income elasticity of demand |
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Opportunity cost |
The next best alternative forgone when an economic decision is made |
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Partial market failure |
When a market provides a product but with a misalocation or resources |