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1.

mixed economies - resources are partly allocated by the


price mechanism / market and partly by the government
2.

free market economy (e.g. resources are allocated by the price


mechanism / demand & supply)
3.

market failure (e.g. price mechanism leads to a net welfare


loss / market fails to allocate resources efficiently)

4.

production possibility frontier (e.g. the maximum output combinations


of two goods an economy can achieve when all its resources are fully
and efficiently employed)

5.

opportunity cost (e.g. value of the next best alternative foregone)

6.

price elasticity of demand (e.g. responsiveness of demand for a good


due to a change in its price or %QD %P)

7.

normal good (e.g. as real income increases, so will demand increase

8.

derived demand its demand is derived from the demand for the
product it makes

9.

external benefits (e.g. positive third party effects / positive spillover


effects / benefits from a transaction which the price mechanism
ignores / difference between social benefits and private benefits)
10.

subsidy (Government grant to firms to increase


production / reduce price of a good)

11.

minimum price scheme (a floor price / minimum price below which


price cannot fall) - (e.g. stabilise prices or increase producer income)

12.

cross elasticity of demand or formula (e.g. responsiveness in demand


for one good due to a change in price of another good or %QD good
B %P good A)

13.

geographical mobility / immobility of labour (e.g. the ability / inability


of labour to move from one location to another in taking work)

14.

VAT (a tax placed on the expenditure / a tax set as a percentage of


the price of a good) or indirect tax
15.

Complementary goods have a negative cross elasticity of


demand.

16.

tradable pollution permits, e.g. an allowance on the amount of


pollution firms may emit which can be bought and sold in the
market.

17.

free rider problem (difficulty in charging people for consuming a good


once it is provided)

18.

public goods (non-excludable and non-rivalry)

19.

positive statement is required (one that is based on fact / it can be


tested as true or false / a scientific approach to economics / objective
statement)

20.

normative statement (one that is based on value judgement / it


cannot be tested as true or false / a non-scientific approach to
economics / subjective statement)

21.

specific tax (a fixed charge imposed per a unit of good / a tax placed
on the expenditure on a good / a compulsory levy on suppliers)

22.

(price times quantity demanded or the total revenue received from


selling a given quantity of output)

23.

Demand is income elastic or a normal good

24.

inferior goods negative income elasticity

25.

substitutes / competitive demand , complement / joint demand

26.

type of market failure e.g. imperfect market knowledge or asymmetric


information

27.

affordability (ratio of house prices to earnings / income)

28.

producer surplus (the difference between the price a firm is willing to


sell a good for and the actual market price

29.

price elasticity of demand (PED): (the responsiveness or sensitivity of


demand for a good due to a change in its price)
30.

buffer stock scheme (for example: agency sells from buffer


stock in times of poor harvest and buys or adds to it in times of
good harvest

31.

welfare gain (the excess of social benefit over social cost for a given
quantity)

32.

price mechanism (the interaction of supply and demand to allocate


resources)

33.

equilibrium price (a price where the quantity demand equals the


quantity supply)

34.

imperfect market information (people lack knowledge to make


informed choices)

35.

pension (e.g. contributions that workers make from their income


which they can use on retirement)

36.

economic growth (an increase in real GDP / an increase


in the productive potential for an economy / increase in
productive capacity / an outward shift in the PPF curve).

37.

price elasticity of supply (the responsiveness of supply


due to a change in price of a good, or, %QS %P).

38.

sustainable resource in terms of something that is being


used or consumed or produced / at a rate that will
ensure it is available for future generations / it may not
run out it is renewable.

39.

external costs: cost external to an exchange / negative

third party effect / spillover from production / cost which


the price mechanism fails to take into account or is
outside the market transaction / social cost minus
private cost.
40.

Occupational mobility refers to the ability of labour


to move from one occupation to another

41.

specialisation or division of labour (labour allocate all their


time in producing just one good or service)

42.

welfare loss (the excess of social cost over social benefit for a
given output)

43.

Indirecttaxfixedchargeimposedontheexpenditureofagood

44.

resources (for example, labour, land, capital and


enterprise used in production of goods and services)

45.

scarcity (resources are limited or finite in supply and so


cannot meet all human wants)

46.