front 1 Microeconomics | back 1 the study of the behaviour and decisions of households and firms, and the performance of individual markets. |
front 2 Macroeconomics | back 2 the study of the whole economy |
front 3 Market | back 3 an arrangement which brings buyers into contact with sellers |
front 4 Economic agents | back 4 those people who undertake economic activities and make economic decisions |
front 5 Economic systems | back 5 the institutions, organisations and mechanisms that influence economic behaviour and determine how resources are allocated |
front 6 Planned economic system | back 6 an economic system where the government makes the crucial decisions, land and capital are state-owned and resources are allocated by directives |
front 7 Mixed economic system | back 7 an economy in which both the private and public sectors play an important role |
front 8 Market economic system | back 8 an economic system where consumers determine what is produced, resources are allocated by the price mechanism and land and capital are privately owned |
front 9 Price mechanism | back 9 the way the decisions made by households and firms interact to decide the allocation of resources |
front 10 Capital intensive | back 10 the use of a high proportion of capital relative to labour |
front 11 Labour-intensive | back 11 the use of a high proportion of labour relative to capital |
front 12 Market equilibrium | back 12 a situation where demand and supply are equal at the current price |
front 13 Market disequilibrium | back 13 a situation where demand and supply are not equal at the current price |
front 14 Demand | back 14 the willingness and ability to buy a product |
front 15 Market demand | back 15 total demand for a product |
front 16 Aggregation | back 16 the addition of individual components to arrive at a total amount |
front 17 Extension in demand | back 17 a rise in the quantity demanded caused by a fall in the price of the product itself. |
front 18 Contraction in demand | back 18 a fall in the quantity demanded caused by a rise in the price of the product itself. |
front 19 Increase in demand | back 19 a rise in demand at any given price, causing the demand curve to shift to the right |
front 20 Decrease in demand | back 20 a fall in demand at any given price, causing the demand curve to shift to the left |
front 21 Normal goods | back 21 a product whose demand increases when income increases and decreases when income falls |
front 22 Inferior goods | back 22 a product whose demand decreases when income increases and increases when income falls |
front 23 Substitute | back 23 a product that can be used in place of another |
front 24 Complement | back 24 a product that is used together with another product |
front 25 Ageing population | back 25 an increase in the average age of the population |
front 26 Birth rate | back 26 the number of live births per thousand of the population in a year |
front 27 Supply | back 27 the willingness and ability to sell a product |
front 28 Market supply | back 28 total supply of a product |
front 29 Extension in supply | back 29 a rise in the quantity supplied caused by a rise in the price of the product itself. |
front 30 Contraction in supply | back 30 a fall in the quantity supplied caused by a fall in the price of the product itself. |
front 31 Changes in supply | back 31 changes in supply conditions causing shifts in the supply curve |
front 32 Increase in supply | back 32 a rise in supply at any given price, causing the supply curve to shift to the right |
front 33 Decrease in supply | back 33 a fall in supply at any given price, causing the supply curve to shift to the left |
front 34 Unit cost | back 34 the average cost of production. It is found by dividing total cost by output |
front 35 Improvements in technology | back 35 advances in the quality of capital goods and methods of production |
front 36 Direct taxes | back 36 taxes on the income and wealth of individuals and firms |
front 37 Indirect taxes | back 37 taxes on goods and services |
front 38 Tax | back 38 a payment to the government |
front 39 Subsidy | back 39 a payment by the government to encourage the production or consumption of a product |
front 40 Equilibrium price | back 40 the price where demand and supply are equal |
front 41 Disequilibrium | back 41 a situation where demand and supply are not equal |
front 42 Excess supply | back 42 the amount by which supply is greater than demand |
front 43 Excess demand | back 43 the amount by which demand is greater than supply |
front 44 Price elasticity of demand (PED) | back 44 a measure of the responsiveness of the quantity demanded to a change in price |
front 45 Elastic demand | back 45 when the quantity demanded changes by a greater percentage than the change in price |
front 46 Inelastic demand | back 46 when the quantity demanded changes by a smaller percentage than the change in price |
front 47 Perfectly elastic demand | back 47 when a change in price causes a complete change in the quantity demanded |
front 48 Perfectly inelastic demand | back 48 when a change in price has no effect on the quantity demanded |
front 49 Unit elasticity of demand | back 49 when a change in price causes an equal change in the quantity demanded, leaving total revenue unchanged. |
front 50 Price elasticity of supply (PES) | back 50 a measure of the responsiveness of the quantity supplied to a change in price |
front 51 Elastic supply | back 51 when the quantity supplied changes by a greater percentage than the change in price |
front 52 Inelastic supply | back 52 when the quantity supplied changes by a smaller percentage than the change in price |
front 53 Perfectly elastic supply | back 53 when a change in price causes a complete change in the quantity supplied |
front 54 Perfectly inelastic supply | back 54 when a change in price has no effect on the quantity supplied |
front 55 Unit elasticity of supply | back 55 when a change in price causes an equal change in the quantity supplied |
front 56 Public sector | back 56 the part of the economy controlled by the government |
front 57 State-owned enterprises (SOEs) | back 57 organisations owned by the government which sell products |
front 58 Privatisation | back 58 the sale of public assets to the private sector |
front 59 Price mechanism | back 59 the system by which the market forces of demand and supply determine prices |
front 60 Market failure | back 60 market resources resulting in an inefficient allocation of resources |
front 61 Free rider | back 61 someone who consumes a good or service without paying it |
front 62 Allocative efficiency | back 62 when resources are allocated to produce the right products in the right quantities |
front 63 Productively efficient | back 63 when products are produced at the lowest possible cost and making full use of resources |
front 64 Dynamic efficiency | back 64 efficiency occurring over time as a result of investment and innovation |
front 65 Third parties | back 65 those not directly involved in producing or consuming a product |
front 66 Social benefits | back 66 the total benefits to a society of an economic activity |
front 67 Social costs | back 67 the total costs to a society of an economic activity |
front 68 Private benefits | back 68 benefits received by those directly consuming or producing a product |
front 69 Private costs | back 69 costs borne by those directly consuming or producing a product |
front 70 External benefits | back 70 benefits enjoyed by those who are not involved in the consumption and production activities of others directly |
front 71 External costs | back 71 costs imposed on those who are not involved in the consumption and production activities of others directly |
front 72 Socially optimum output | back 72 the level of output where social cost equals social benefit and society's welfare is maximised |
front 73 Merit goods | back 73 products which the government considers consumers do not fully appreciate how beneficial they are and so they will be under- consumed if left to market forces. Such goods generate positive externalities. |
front 74 Demerit goods | back 74 products which the government considers consumers do not fully appreciate how harmful they are and so they will be over-consumed if left to market forces. Such goods generate negative externalities |
front 75 Public good | back 75 a product which is non-rival and non- excludable hence needs to be financed by taxation. |
front 76 Private goods | back 76 a product which is both rival and excludable |
front 77 Monopoly | back 77 a single seller |
front 78 Price fixing | back 78 when two or more firms agree to sell a product at the same price |
front 79 Mixed economic system | back 79 an economy in which both the private and public sectors play an important role |
front 80 Rationing | back 80 a limit on the amount that can be consumed |
front 81 Lottery | back 81 the drawing of tickets to decide who will get the products |
front 82 Nationalisation | back 82 moving the ownership and control of an industry from the private sector to the government |
front 83 Public corporation | back 83 a business organisation owned by the government which is designed to act in the public interest |