economics paper 1 - key words

scarce resources

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

opportunity cost

the next best alternative given up when making a choice

unlimited wants

the infinite desire for something

economic sustainability

the best use of resources in order to create responsible development or growth, now and into the future

social sustainability

the impact of development or growth that promotes an improvement in quality of life for all, now and into the future

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

primary sector

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

secondary sector

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

tertiary sector

all activities in an economy that involved the idea of a service

factor market

market in which the services of the factors of production are bought and sold

product market

market in which final goods or services are offered to consumers, businesses and the public sector

specialisation

the process by which individuals, firms, regions and whole economies concentrate on producing those products that they are best at

division of labour

where workers specialise in or concentrate on one area of the production process

demand

the willingness and ability to purchase a good or service at the given price in a given time period

supply

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

subsidy

an amount of money the government gives directly to firms to encourage production and consumption

tax

a compulsory payment to the government

elastic demand

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

inelastic demand

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

price elasticity of demand

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

elastic supply

when the percentage change in quantity supplied is greater than the percentage change in price

inelastic supply

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

price elasticity of supply

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

price

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

efficiency

the optimal production and distribution of scarce resources

competition

where different firms are trying to sell a similar product to a consumer

monopoly

a sole producer or seller of a good or service

oligopoly

where a small number of firms control the large majority of market share

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

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

average cost

the cost of producing a unit

total revenue

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

average revenue

the revenue per unit sold

loss

when a firms revenue is less than its total costs

economies of scale

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

labour market

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

supply of labour

the total number of people willing and eligible to supply their labour, including the unemployed

gross pay

the amount of money that an employee earns before any deductions are made

income tax

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

national insurance

a contribution paid by workers and their employers towards the cost of state benefits

net pay

the amount of money that an employee is left with after deductions are made from gross income

pension

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

money

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

financial sector

consists of financial organisations and their products, and involves the flow of capital

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

rate of interest

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

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

mortgage

an agreement with a financial institution to borrow money to purchase a property

insurance company

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

capital

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

collective bargaining

negotiations between a recognised trade union and employers

consumer

a person or organisation that directly uses a good or service

excess demand

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