Economics year one definitions
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- Created by: ReubenJHyde
- Created on: 15-11-23 20:41
The Basic Economic Problem
People have an unlimited set of wants and needs but we have a limited amount of resources.
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Economics
The allocation of scarce resources.
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Opportunity Cost
The cost of any possible alternative when making a purchase/choice (e.g: if you buy a car, you can’t go on holiday).
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Market
An opportunity for buyers and sellers to meet and where market factors determine the price of a P/S.
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Factor Market
A market for factors of production and consists of the initial substance that will turn into a product (E.g: Metal, livestock and fish).
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Product Market
A market for the sale of the final product or service (E.g I phone, McDonald's burger and fish fingers).
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Division of Labour
The specialisation/ separation of the workforce so that separate tasks are undertaken by specific individuals.
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Specialisation
How an economy will concentrate the production of goods they are most efficient at.
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Staff Turnover
The rate at which employees leave a workplace.
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Expansions/ Extensions of Demand/Supply
The movement of the D/S curves away from the origin.
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Contraction of Demand/Supply
The movement of the D/S curve towards the origin.
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Ceteris Paribus
When we draw a demand curve we assume that conditions of demand unmentioned remain constant.
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Equilibrium Price
The point where demand is equal to supply.
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Demand
The willingness and ability of consumers to purchase a G/S at the given price in a given period of time.
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Supply
The ability and willingness of firms to provide G/S at the given price in a given period of time.
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Market Demand
The total demand for a G/S found by adding all the given by adding all individual demands.
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Subsidy
An amount of money the government gives to firms to encourage production and consumption.
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Elastic Demand
When the percentage change in quantity demanded is greater than the percentage change in price.
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Inelastic Demand
When the percentage change in quantity demanded is less than the percentage change in price.
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Price Elasticity of Demand
The responsiveness of quantity demanded a change in price of a product.
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Price Elasticity of Supply
The responsiveness of quantity supplied to a change in price of a product (Caused by a change in demand).
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Efficiency
The optimal production and distribution of scarce resources.
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Competition
Where different firms are trying to sell a similar product to consumers.
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Brand Loyalty
When a consumer will stick with one brand regardless of the advantages of any alternatives (E.g Apple, Nike)
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Fixed Cost
Any cost that does not change with amount of output (E.g: Rent)
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Variable Cost
Any cost that does change with the amount of output (E.g: Ingredients for a bakery).
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Total Cost
The total cost to produce all G/S (Fixed costs + Variable costs).
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Average Costs
Total cost divided by number of units produced (Tc/Q).
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Monopoly
A sole producer or seller of a G/S. Very few monopolies still exist. (E.g: Nuclear power).
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Oligopoly
Where a small number of firms control a large majority of market share (E.g: Apple, Google).
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Nationalisation
When the government takes control of private companies.
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Privatisation
When public companies become privately owned and controlled.
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Production
The total output of G/S produced by a firm or industry in a period of time using factors of production.
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Productivity
A measure of the degree of efficiency in the use of factors of production during the production process (Productivity = Total Output/Total Input).
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Economies of Scale
A financial advantage that comes from increasing output or production leading to a fall in average cost per unit produced.
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Buying in Bulk
Usually, businesses can buy raw materials or components for cheaper if bought in bulk. Lower prices are due to a fall in average cost of transport or due to a fall in administration cost.
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External Economies of Scale
Economies of scale that a firm benefits from but are outside a firm’s control.
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Corporation Tax
The percentage of profits a business earns that goes as tax to the government.
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Supply of Labour
The total number of people who are willing and eligible to supply their labour. This includes the unemployed.
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Derived Demand
The demand for labour depends on the demand for the P/S that that labour helps produce (E.g: The demand for bricklayers is based on the demand for new houses).
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Labour Market
Where the supply of labour offered by households interacts with the demand for labour from firms. This interaction gives us the price of labour (Wage rate).
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Income
The reward for services provided by a factor of production (namely labour) and is a consistent flow over time.
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Wealth
The market value of all the assets owned by a person, group or country at a specific point in time. Wealth is a stock of assets (E.g: Money, houses and land).
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Coincidence of Wants
Where two people trade goods who coincidentally want each others’ goods.
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Commercial Bank
A bank that offers services to the general public and to companies (E.g: Nationwide).
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Central Bank
A national bank that provides financial and banking services for its country's government and commercial banks, as well as oversees the nation's monetary policy and issues its currency (E.g: Bank of England).
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Liquidity
How quickly an asset can be turned into cash.
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Insurance Companies
Encourage people to borrow/spend by Insuring against loss and decreasing risk.
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Other cards in this set
Card 2
Front
The allocation of scarce resources.
Back
Economics
Card 3
Front
The cost of any possible alternative when making a purchase/choice (e.g: if you buy a car, you can’t go on holiday).
Back
Card 4
Front
An opportunity for buyers and sellers to meet and where market factors determine the price of a P/S.
Back
Card 5
Front
A market for factors of production and consists of the initial substance that will turn into a product (E.g: Metal, livestock and fish).
Back
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