1609537
| Question | Answer |
| Goods | Tangible products that we can touch |
| Services | Products we can't touch (like a bus journey), intangible benefits |
| Economic Welfare | the benefit or satisfaction an economy gets from the allocation of resources |
| oppportunity cost | the cost of the next best alterntie foregone when a decision is made |
| economic goods | Goods that are scarce and have an opportunity cost |
| Free goods | have no opportunity cost (i.e. air) |
| Economic activity | trade between countries or individuals in an economy (incl charity work, DIY, trade, illegal trade) |
| Scarcity | Not enough resources to meet all needs |
| Factor Incomes | Owners of the factors of production can sell or loan them for payment |
| Factor market | the market where factors of production are sold (i.e. stock market= capital ownership) |
| Free market ecconomy | limited government involvement to provide goods and services. The main role is to ensure markets are fair |
| market | a place that brings together a buy and a seller to agree on a price to exchange goods and services. |
| buyer | consumer who demands what is being sold |
| sellers | supliers who sell what is being demanded |
| supply | the amount of product supplied at various prices in a particular time period |
| planned economy | an economic system in which governmeent controls and regulates production, distribution, prices etc |
| mixed economy | an ecconomy in which there are elements off both public and private entreprise |
| wholesale | selling for trade (middle men) |
| Decoupling | A process of trying to increase resource efficiency and break the link between increased demand and increased resource depletion. |
| Derived demand | When the demand for one good or service comes from the demand for another good or service, such as the demans for steel deriving from the demand for cars. |
| Composite demand | a good that is demanded for more than one purpose, and an increase in demand for one purpose leads to a decrease in supply for the other, leading to higher prices. Milk or meat for cows? |
| Joint Supply | tthe production of one good also leads to the production of another, such as leather being produceed as a result of produing meat. |
| Joint demand | When two goods or services are demanded together (complementary goods) , such as staples and staplers. |
| Price mechanism | The means by which millions of decisions made by consumers and businesses interact to determine the allocation of scarce resources between competing uses from an equilibrium price and quantity. |
| Secondary Markets | When buyers and sellers are prepared to re-sell items already purchased in a 2nd market. |
| Production | The process of making raw materials and Factors of Production into finished goods and products. |
| Specialisation | An individual FOP or firm makes a limited range of good/part of a good in cooperation with others so a complete good/range can be produced. |
| Division of labour | Breaking the production processs down into a series of tasks, with workers assigned to a particular task |
| Productivity | A measure of the efficiency of production. Labour productivity is output per worker. |
| Allocative efficiency | WWhen a market produces goods and services that are wanted by consumers (you cant make someone better offf without making someone else worse off) |
| Income | A flow of earnings to a factor of production over a period of time (i.e. wages) |
| Wealth | A stock of owned assets |
| Absolute poverty | Measures the number of people living under a certain income threshold. Houshols who are unable to afford basic goods/services. It varies from country to country. |
| Relative Poverty | The extent to which a household's financial resources fall below an average income level. Most common UK threshold is 60% median income or less. |
| Demand | The quantity of a good or service that consumers are willing and able tp buy at a given price in a given time period. |
| Effective Demand | When a desire to buy a product is backed up with the ability to pay. |
| Latent Demand | The desire to purchase a good or service for a group or people, but they lack the purchasing power to be able to do so. |
| Substitute good | Goods in competitive demand that act as replacements for other goods. |
| Normal Good | When income increases, so does demand. |
| Inferior good | When income increases, demand decreases (such as bus travel) |
| Disretionary incomes | Disposable incomes minus essential payments. |
| Ostentatious Consumption | When a higher price is regarded as being a reflection of the product quality, so consumers are willing to pay (the snob value effect) such as for perfume. |
| Speculative Demand | When a comsumer buys a good/service in the hope that a rise in price will lead to a profit for them. (i.e. Housing/shares) |
| Supply | The quantity of a good or service that a producer is willing and able to supply to the market at a given price in a given time period. |
| Producer Surplus | The difference between what a producer is willing and able to supply a good for, and the price they actually receive. |
| Consumer Surplus | The difference between what a consumer is willing and able to pay for a good or service, and what they actually do pay. It is a measure of the welfare people gain. |
| Economies of Scale | The cost advantages a firm can exploit by expanding the scale of production. (increasing productive efficiency) |
| Internal Economies of Scale | Arise from within the business itself. |
| External Economies of Scale | Occur from within an industry and the expansion of it. (i.e. improved transport network) |
| Diseconomies of Scale | A rise in the average costs of a firm. |
| Productive Efficiency | When output is achieved at mnimum average cost (also wastage is minimised in production) |
| Social Efficiency | Where there is maximised social welfare, and Marginal Social Benefit= Marginal Social Cost. |
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