Notesale: Turn your study into money

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Term
Resource allocation
Centrally planned economy
Demand
Supply
Equilibrium Price
Factors of Production
Free market
Informal markets
Market
Opportunity Cost
Price elasticity of demand
Income elasticity of demand
Cross elasticity of demand
Price elasticity of supply
Indirect tax
Subsidies
Maximum price
Minimum price
Market failure
Allocative efficiency
Externality
Merit good
Demerit good
Informal markets
Property rights
Tradeable permits
Common Access Resources
Public Goods

Definition
The distribution of the FoPs in the activities of an economy
An economic system where resources are allocated by the
government and demand and supply have no role
The quantity of a good that consumers are willing and able to buy at
a given price in a given market, ceteris paribus
The quantity of a good that producers are willing and able to
produce in a given market at a given time, ceteris paribus
The market clearing price at which the quantity demanded is equal
to the quantity supplied
The resources needed to produce goods: land, labour, capital and
entrepreneurship
When price and output are determined by demand and supply, with
no government intervention
Markets where economic activity is not officially recorded
Where buyers and sellers interact in order to exchange goods or
services
A measure of the real cost of one thing in terms of the next best
alternative gone when an economic decision is made
The responsiveness of the quantity demanded due to changes in
price
The responsiveness of the quantity demanded due to changes in
income
The responsiveness of the quantity demanded for good A due to
changes in price for good B
The responsiveness of the quantity supplied due to changes in price
An expenditure tax imposed by the government added to the price
of a good (specific = fixed, ad valorem = percentage)
A payment from the government to a producer to decrease the cost
of production per unit of the good
A price set below the market equilibrium by the government which
firms are not allowed to exceed
A price set above the market equilibrium by the government which
firms are not allowed to set prices below
Occurs where allocative efficiency is not achieved by the market and
social surplus is not maximised
Where social surplus is maximised and S=D
A cost/benefit to a 3rd party as a result of the overconsumption/
overproduction of a good not taken into account by the free market
price
Goods which are considered to be good for society but are underconsumed so are underprovided by the free market
Goods which have negative externalities and are overconsumed in
the free market
Markets in which economic activity is not officially recorded
Legal rights for individuals to own property/assets
Are permits to pollute, issued by a governing body, which sets a
maximum amount of pollution allowable
...

Any profit above that necessary to keep the firm in business
Cost of production per unit TC/Q
A type of collusion where a group of producers in an industry agree
to limit output and raise prices to increase monopoly power and
collective profit
As a firm increases its output by varying all factors of production, its
long run average costs fall
Increases in the long run average total costs of production that occur
as a firm increases it output by varying all factor inputs
...
It is the minimum profit needed to
keep the business running
...
TR = P x Q
The period of time where one or more FoPs are fixed
The period of time where all FoPs are variable, and the state of
technology is fixed
The total amount of a good that firms produce with a given set of
FoPs
TP / V - Amount produced by each unit of labour
The additional amount of a good produced by the last unit of labour
As the variable factor increases, total product increases until there
aren’t enough land/capital for labour to work efficiently
The costs of the FoP including all opportunity costs, made up of
implicit and explicit costs
The price a company that temporarily stops producing its good
produces at (P = AVC)
The price that will keep the entrepreneur in the industry in the long
run (P = ATC)
Where managers and workers in the company meet the minimum
requirements set by stakeholders in order to allow them to pursue
other goals
1
...
of firms in the market
2
...
Low/no barriers to entry and exit
4
...
Firms are small relative to market size
A market structure where one dominant firm can make abnormal
profit in the long run as there are high barriers to entry and no close
substitutes
Occurs in an industry that has economies of scale so large that it can
only support one profitable firm
1
...
of firms in the market
2
...
Small degree of power

Product differentiation

Oligopoly

Mutual interdependence

Asymmetric information

Collusion
Consumption
Investment
Aggregate Demand
Business cycle
Crowding out

Economic growth
Fiscal policy
GDP
Gini Coefficient
Inflation
Inflationary gap
Interest rates
Monetary policy
Multiplier
Nominal
Progressive tax
Real

4
...
No/low barriers to entry
Deliberate action by the producer to distinguish a product from its
competition, usually through branding or packaging
...
A market structure where the market is dominated by a small
number of large firms
2
...
The firms produce homogenous and differentiated goods
4
...
It
is the largest component of AD
Spending by firms in order to add to their capital stock
The total spending on all goods and services across all sectors of an
economy in a given timer period at a given average price level,
AD = C + I + G + (X – M)
The regular pattern of increases and decreases in economic activity
around the long-term trend + diagram
A situation where by borrowing money to fund its own spending, the
government forces up interest rates and thus crowds out private
sector investment
An increased real output for an economy over time and measured as
an increase in real GDP or an increase in the potential output of the
economy through an increase in the quality/quantity of FoPs
A set of government policies aimed at manipulating the level of AD
related to government spending and taxation
The total value of final goods and services produced in a year
A measure of inequality in the distribution of income usually used in
conjunction with the Lorenz Curve
A sustained increase in the average price level
Occurs when actual output is greater than potential output
The price of borrowed money or the price of capital
A set of government policies aimed at manipulating the level of AD
related to interest rates and the supply of money
The process by which an injection into the economy results in a
greater increase in national income
The monetary value of an economic variable before it has been
adjusted for inflation
A system in which as your income increases the proportion of
income paid as tax increases e
...
UK
Adjusted for inflation

Recession

Structural Unemployment

Two consecutive quarters of negative economic growth shown in the
falling section of the trade cycle and is characterised by high
unemployment
Occurs when there are permanent decreases in the demand for
specific types of labour, changes in the geographic locations of
industries or labour market rigidities

Supply-side policies
Unemployment
Unemployment rate
Automatic stabilisers
Budget deficit
Direct taxes
Disinflation
Factors of production
Gross National Income
Infrastructure
Transfer payments

Underemployment

Injection
Leakage
Government expenditure
Exports
Imports
Cyclical/demand-deficient
unemployment

The no
...
of employed people/labour force) x100
Mechanisms within an economy that allow it to respond to demand
side shocks without any government intervention
Arises when a government plans to spend more money than it
raises
...
g
...
FOP comprise
of land, labour, capital and entrepreneurship
A measure of the total income received by residents of a country
over a given period of time
Capital, usually provided by the government, essential for economic
activity such as roads
...
g
...
g

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