economics paper 1 - key words

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53 Terms

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scarce resources

when there is an insufficient amount of something to satisfy all wants

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opportunity cost

the next best alternative given up when making a choice

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unlimited wants

the infinite desire for something

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economic sustainability

the best use of resources in order to create responsible development or growth, 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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environmental sustainability

the impact of development or growth where the effect on the environment is small and possible to manage, now and into the future

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primary sector

the direct use of natural resources, such as the extraction of basic materials and goods from the land and sea

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secondary sector

all activities in an economy are concerned with either manufacturing or construction

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tertiary sector

all activities in an economy that involved 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 or services are offered to consumers, businesses and the public sector

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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

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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 time period

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supply

the willingness and ability of firms to produce goods and services at each price in a given period of time

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subsidy

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 demanded is greater than the percentage change in price

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inelastic demand

when the percentage change in quantity demanded is smaller than the percentage change in price

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price elasticity of demand

the responsiveness of quantity demanded to a change in the price of the product

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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 quantity supplied is smaller than the percentage change in price

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price elasticity of supply

the responsiveness of quantity supplied to a change in the price of a product

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price

the sun of money you have to pay for a good or service. it is determined by the interaction of supply and dem

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efficiency

the optimal production and distribution of scarce resources

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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 a producer has left after all costs have been paid i.e. when total revenue is greater than total costs

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productivity

one measure of the degree of efficient in the use of factors of production. it is measure in terms of output per unit of input

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average cost

the cost of producing a unit

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total revenue

the total income of a firm from the scale of its good and services

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average revenue

the revenue per unit sold

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loss

when a firms revenue is less than its total costs

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economies of scale

the cost advantages a firm can gain by increasing the scale of production, leading to a fall in average costs

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labour market

where workers sell their labour and employers buy the labour. it consists of households’ supply of labour and firms’ demand for labour

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supply of labour

the total number of people 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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income tax

a tax levied directly on personal income i.e a tax on persons 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 gross income

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pension

a fixed amount paid at regular intervals to a person, or their surviving dependents

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money

anything that is generally accepted as a means of payment for goods and services, medium of exchange

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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. also, an asset purchased to provide an income in the future and/or to be sold at a profit

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rate of interest

the cost of borrowing i.e that which is paid to the lender. the reward for saving

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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 institutions that guarantees compensation for specified loss, damage, illness or death in return for an agreed premium

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capital

the factor of production that related to the human-made aids to production

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collective bargaining

negotiations between a recognised trade union and employers

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consumer

a person or organisation that directly uses a good or service

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excess demand

where, at the current price, the amount demanded is greater than the amount sellers are willing to supply