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20 Cards in this Set
- Front
- Back
define PED
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% change of QD ÷ % change of price
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define YED
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% change of QD ÷ % change of income
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define XED
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% change of QD of good A ÷ % change of price of good B
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define a normative statement
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it is a value judgement which is not provable
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define a positive statement
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A statement about what is (i.e. about facts) is provable can be tested to be true or false
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what is asymmetric information?
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it is a situation in which some participants in a market have better information about market conditions than others.
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Buffer stock
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surplus stock that is bought up when the harvest is good with a view to selling when it is poor, in an attempt to stabilise commodity prices.
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define a capital good
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goods that are produced In order to be used as inputs into the production process, such as factories, machinery etc.
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centrally planned economy
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an economy in which decisions on resource allocation are guided by the state eg East Germany before 1988
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competitive market
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is a market in which individual firms cannot influence the price of the good or service they are selling, because of competition from other firms.
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complements
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two goods are said to be complements if an increase in the prices of one good causes the demand for the other good to fall.
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consumer good
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a good that are produced in order to satisfy the consumption demands of the present
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consumer surplus
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the value that consumer gain from consuming a good or service over and above the price paid
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consumption or production externality
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an externality that affects the consumption or production side of a market, which may be either positive or negative
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demand
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the quantity of a good or service that consumers choose to buy at any possible price in a given period
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demand curve
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a graph showing how much of a good will be demanded by consumers at any given price
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derived demand
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demand for a good or service not for its own sake, but for what it produces. for example, labour is demanded for the output that it produces
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division of labour
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A process whereby the production procedure is broken down into a sequence of stages, and workers are assigned to particular stages.
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elasticity
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a measure of the sensitivity of one variable to change in another variable
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external cost
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a cost that is associated with an individual's ( a firm or household's) production or other economic activities, which is borne by a third party and is not reflected in the market prices. e.g passive smoking
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