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62 Cards in this Set
- Front
- Back
SUPPLY |
the quantity of a product that producers are willing and able to provide at different market prices over a period of time. |
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DEMAND |
the quantity of a product that consumers are able and willing to purchase at various prices over a period of time. |
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COMMAND ECONOMY |
an economic system in which most resources are state owned and also allocated centrally. |
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MIXED ECONOMY |
an economic system in which resources are allocated through a mixture of the market and direct public sector involvement. |
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MARKET |
where or when buyers and sellers meet to trade or exchange products. |
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SUB-MARKET |
a recognised or distinguishable part of a market. Also known as a market segment. |
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NOTIONAL DEMAND |
the desire for a product. |
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EFFECTIVE DEMAND |
the willingness and ability to buy a product. |
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CETERIS PARIBUS |
(Latin: other things being equal: assuming other variables remain unchanged.
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DEMAND CURVE |
this shows the relationship between the quantity demanded and the price of a product.
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DEMAND SCHEDULE |
the data that is used to draw the demand curve for a product. |
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MOVEMENT ALONG THE DEMAND CURVE
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this is in response to a change in the price of a product. |
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CONSUMER SURPLUS
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the extra amount that a consumer is willing to pay for a product above the price that is actually paid. |
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DISPOSABLE INCOME
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income after taxes on income have been deducted and state benefits have been added. |
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REAL DISPOSABLE INCOME |
income after taxes on income have been deducted and state benefits have been added and the result has been adjusted to take into account changes in the price level. |
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NORMAL GOODS |
goods for which an increase in income leads to an increase in demand. |
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SUPERIOR GOODS |
one for which the income elasticity of demand is positive, and greater than 1, such that as income rises, consumers spend proportionately more on the good |
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INFERIOR GOODS |
goods for which an increase in income leads to a fall in demand. |
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SUBSTITUTES |
competing goods that have a positive cross elasticity of demand. |
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COMPLEMENTS |
goods for which there is joint demand. These goods will have a negative cross elasticity of demand. |
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CHANGE IN DEMAND |
this is where a change in a non-price factor leads to an increase or decrease in demand for a product. |
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PROFIT |
the difference between the total revenue (sales revenue) of a producers and total cost. |
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SUPPLY CURVE |
this shows the relationship between the quantity supplied and the price of a product. |
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SUPPLY SCHEDULE |
the data used to draw up the supply curve of a product. |
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PRODUCER SURPLUS |
the difference between the price a producer is willing to accept and what it is actually paid. |
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CHANGE IN SUPPLY |
occurs when a change in a non-price influence leads to an increase or decrease in the willingness of a producer to supply a product. |
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PRICE |
the amount of money that is paid for a given amount of a particular good or service. |
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EQUILIBRIUM PRICE |
the price where demand and supply are equal. |
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CLEARING PRICE |
the price where demand and supply are equal. |
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EQUILIBRIUM QUANTITY |
the quantity that is demanded and supplied at the equilibrium price. |
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DISEQUILIBRIUM |
a position in the market where demand and supply are not equal. |
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SURPLUS |
an excess of supply over demand. |
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SHORTAGE |
an excess of demand over supply. |
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ELASTICITY |
the extent to which buyers and sellers respond to a change in market conditions. |
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PED |
the responsiveness of the quantity demanded to a change in the price of the product. |
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PRICE ELASTIC
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where the percentage change in the quantity demanded is sensitive to a change in price. |
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PRICE INELASTIC |
where the percentage change in the quantity demanded is insensitive to a change in price. |
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INCOME ELASTICITY OF DEMAND |
the responsiveness of demand to a change in income. |
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NORMAL GOODS |
goods with a positive income elasticity of demand. |
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INCOME INELASTIC |
goods for which a change in income produces a less than proportionate change in demand. |
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INCOME ELASTIC |
goods for which a change in income produces a greater proportionate change in demand. |
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INFERIOR GOODS |
goods for which an increase in income leads to a fall in demand. |
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XED |
the responsiveness of demand for one product in relation to a change in the price of another product. |
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PES |
the responsiveness of the quantity supplied to a change in the price of a product. |
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EFFICIENCY |
where the best use of resources is made for the benefit of consumers. |
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ECONOMIC EFFICIENCY |
where both allocative and productive efficiency are achieved. |
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ALLOCATIVE EFFICIENCY |
where consumer satisfaction is maximised. |
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PARETO OPTIMUM |
an allocation of resourses is sadi to be a Pareto optimum if no reallocation of resources can make an individual better off without making some other individual worse off. |
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TOTAL COSTS |
the sum of all costs that are incurred in producing a given level of output. |
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AVERAGE TOTAL COSTS |
total cost divided by the quantity produced. |
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MARGINAL COST |
the cost of producing an additional unit of output. |
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FIXED COST |
costs incurred by a firm that do not vary with the level of output. |
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SUNK COSTS |
costs incurred by a firm that cannot be recovered if the firm ceases trading . |
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VARIABLE COST |
costs that vary with the level of output . |
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ECONOMIES OF SCALE |
occur for a firm when an increase in the scale of production leads to production at lower long-run average cost. |
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INTERNAL ECONOMIES OF SCALE |
economies of scale that arise from the expansion of a firm. |
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EXTERNAL ECONOMIES OF SCALE |
economies of scale that arise from the expansion of the industry in which a firm is operating. |
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INTERNAL DISECONOMIES OF SCALE |
diseconomies of scale that arise from the expansion of a firm. |
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EXTERNA DISECONOMIES OF SCALE |
diseconomies of scale that arise from the expansion of the industry in which a firm is operating. |
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TECHNICAL EFFICIENCY |
attaining the maximum possible output from a given set of inputs. |
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COST EFFICIENCY |
the appropriate combination of inputs of factors of production, given the relative prices of those factors. |