A person or organization that directly uses a good or service
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Good
A tangible product i.e. a product that can be seen or touched
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Government
A political authority that decides how a country is run and manages its operation
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Producer
A person, company, or country that makes, grows, or supplies goods and/or services
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Service
An intangible product i.e. a product that cannot be seen or touched
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Factors of production
The resources in an economy that can be used to make goods and services (CELL)
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Labour
The factor of production concerned with the workforce of an economy
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Land
The factor of production concerned with natural resources of an economy
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Capital
The factor of production that relates to the human made aids to production e.g. machinery
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Enterprise
The Factor of production that takes a risk (the entrepreneur) in organising the other 3 factor of productions
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Interdependent
How factors are reliant on one another
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Scarce Resources
When there is an insufficient amount of something to satisfy all wants
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Unlimited wants
The infinite desire for something
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Need
Something a consumer has to have to survive e.g. water/food
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Want
Something a consumer would like to have but which is not essential for survival
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Economic problem
How to best use limited resources to satisfy the unlimited wants of people
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Opportunity cost
The next best alternative given up when making a choice
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Economic choice
An option for the use of selected scarce resources
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Economic sustainability
The best use of resources in order to create responsible developmnet or growth that promotes an improvement in quality of life for all, now and into the future
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Social Sustainability
The impact of development or growth that promotes an improvement in quality of life for all, now and into the future
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Enviromental sustainability
The impact of development or growh where the effect on the enviroment is small and possible to manage, now and into the future
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Market
A way of bringing buyerd and sellers to buy and sell goods and services
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Market economy
An economy in which scarce resources are allocated by the market forces of supply and demand
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Primary sector
The direct use of natural resources such as the extraction of basic materials and goods from land and sea
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Secondary sector
All activities in an economy that are concerned with either manufacturing or construction
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Tertiary sector
All activities in an economy that include the idea of a service
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Factor market
Market in which the services of the factors of production are bought and sold
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Product market
Market in which final goods and services are offered to consumers, buisnesses and the public sector
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Exchange
The giving up of something that the individual or firm has, in return for something they wish to have but do not possess
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Specialisation
The process by which individuals, firms, regions and whole economies concentrate on producing those products that they are best at producing
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Division of labour
Where workers specialise in, or concentrate on one area of the production process
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Demand
The willingness and ability to purchase a good or service at the given price in a given period of time
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Individual demand
The deman for a good or service by an individual consumer
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Law of demand
For most products the quantity demanded varies inversely with its prices
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Market demand
The total deman for a good or service found by adding together all individual demands
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Movement along the demand curve
When the price changes, leading to a movement up (expansion) or down (contraction) the existing demand curve
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Shift of the demand curve
A complete shift of the existing demand curve either to the right (increased demand) or to the left (decreased demand)
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Sunsidy
An amount of money the government gives directly to firms to encourage production and consumption
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Tax
A compulsory payment to the government
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Elastic demand
When the percentage change in quantity is greater than the percentage change in price (price sensitive customers)
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Inelastic demand
When the percentage change in quantity demanded is less than the percentage change in price (customers are not price sensitive)
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Price elasticity of demand (PED)
The responsiveness of quantity demanded to a change in price of a product
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Law of supply
For most products the quantity supplied varies directly with its price
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Supply
The ability and willingness of firms to provide good and services at each price in a given time period
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Individual supply
The supply of a good or service by an individual producer
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Market supply
The total supply of a good or service as a result of adding together all individual producers supplies
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Movement along the supply curve
When the price changes, leading to a movement up (expansion) or down (contraction) on the existing supply curve
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Shift of the supply curve
The complete shift of the existing supply curve either to the right (increased supply) or to the left (decreased supply)
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Elastic supply
When the percentage change in quantity supplied is greater than the percentage change in price
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Inelastic supply
When the percentage change in the quantity supplied is less than the percentage change in price.
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Price elasticity of supply (PES)
The responsiveness of quantity supplied to a change in the price of the product
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Price
The sum of money you have to pay for a good or service. It is determined by the interaction of supply and demand
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Efficiency
The optimal production and distribution of scarce resources
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Equilibrium price and quantity
Where the quantity supplied exactly matches the quantity demanded
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Allocation of resources
How scarce resources are distributed among producers, and how scarce goods and services are allocated among consumers
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Determination of price
The interaction of the free market forces of demand and supply to establish the general level of price for a good or service
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Market forces
Factors that determine price levels and the availability of goods and services in an economy without government intervention
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Competition
Where different firms are trying to sell a similar product to a consumer
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Monopoly
A sole producer or seller of a good or service
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Oligopoly
Where a small number of firms control the large majority of market share
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Profit
The amount of money left after all costs have been paid total revenue - total costs
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Productivity
A measure of efficiency in the use of factors of production in the production process. The output per unit of input
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Average cist
The cost of producing a unit - unit cost of production total cost/nmber of units
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Total cost
All the costs of the firm added together
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Total revenure
The total income of a firm from the sale of its goods or service selling priced x number of items sold
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Average revenue
The revenue per unit sold total revenue/number of units sold
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Loss
When a firm's revenue is less than its costs
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Economies of scale (Internal EOS)
The cost advantages a firm can achieve by increasing the scale of production, leading to a fall in average costs
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Risk bearing economies
Large firms can spread the risk by offering a range of products or services
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Finacial economies
Large firms can borrow money from the bank at a lower interest rate
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Marketing economies
Large firms can pay for bigger marketing campaigns which reach a larger audience
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Technical economies
Large firms can buy the best machines and expertise which increases output
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Managerial economies
Large firms can afford to employ specialist managers
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Purchasing economies
Large firms can bulk buy their raw materials
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Economies of increased dimensions
Doubling the dimensions of a shipping containers to increase capacity and reduce costs of transportation
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Research and development economies
Large firms can afford their own R&D departments, helping them stay ahead of competition
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Labour market
Where workers sell their labout and employers buy their labour
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Supply of labour
The total number of people who are willing and eligible to supply their labour, including the unemployed
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Gross pay
The amount of money that an employee earns before any deductions are made
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Deductions
Money taken out of a persons pay bracket e.g. income tax/national insurance/pension contribution
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Income tax
A tax levied directly on personal income, i.e. a tax on a person's wages.
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National insurance
A contribution paid by workers and their employers, towards the cost of state benefits
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Net pay
The amount of money that an employee is left with after deductions are made from the gross income
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Pension
A fixed amount paid at regular intervals to a person (usually retired), or their surviving dependants.
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Money
Anything that is generally accepted as a means of payment for a good or service
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Medium of exchange
Anything that sets the standards of goods and services acceptable to all parties involved in a transaction
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Financial sector
Consists of financial organisations and their products, and involves the flow of capital
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Investment
The purchase of capital goods that are used to produce future goods and services
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Rate of interest (interest rate)
The cost of borrowing money and the reward for saving money
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Building society
A mutual financial institution that is owned by its members. Its primary objectives are to receive deposits from its members and to lend money for members to purchase property
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Mortgage
An agreement with a financial institution to borrow money to purchase a property
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Insurance company
Financial institution that guarantees compensation for specified loss, damage, illness or death in return for an agreed premium
Studied by 24 people
