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12 Cards in this Set
- Front
- Back
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What is an economy?
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An economy is an area where people produce goods and services.
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What is a market?
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A market is a group of people willing to exchange goods and services.
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What is the term used to describe the inability for just a consumer/producer to influence the price charged for goods and services
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A perfect market is when either a producer or consumer cannot influence the price charged for goods and services without the other.
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What is an imperfect market
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An imperfect market is when a powerful consumer or producer can influence prices to its advantage.
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The four factors of production are…
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Land, Capital, Labour, Enterprise
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What are consumer goods? State its two types
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Consumer goods are products bought by consumers to satisfy their wants. There is the durable consumer good which can last a long time and a non-durable consumer good which does not last long.
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What are capital goods? Give an example
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Capital goods are man made resources produced by labour which can help in the production of other goods and services.
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What is the difference between public and merit goods? Give an example of each.
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A public good is offered by the government since no private firm would be willing to produce it since it would not profit them. Ie: street lighting.
A merit good is a good/service offered by the government since it feels that people need them regardless whether they can pay for them or not. Ie: Public hospital, public education. |
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Define transfer earnings and economic rent.
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Transfer earnings are what a person would earn in their next best job.
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What does a Rent of Ability refer to?
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Economic rent refers to what a person earns above his/her transfer earnings in their normal occupation. (Normal Earnings – Transfer earnings)
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Define private wealth, social wealth and national wealth.
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Private wealth refers to goods and services owned by entrepreneurs and people in the private sector. Social wealth refers to goods and services owned by the government in the public sector. National wealth is both private and social wealth.
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Define the two types of income.
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Earned income refers to money earned while working (wage/salary). Unearned income refers to money generated from assets and wealth (no working required)
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