Economics for CSEC® Examinations - Basic Economic Concepts and Market Structures

This set of vocabulary flashcards covers essential economic concepts from the CSEC syllabus, including production factors, market structures, macroeconomics, and regional/ and the financial sector.

Economics

A social science that deals with the allocation of scarce resources to satisfy unlimited wants, the creation of wealth, and the behavior of groups involved in production and consumption.

The Economy

The mechanism through which scarce resources are organized for the production of goods and services to satisfy the needs and wants of households, firms, and the government.

Scarcity

The economic condition where resources and goods are insufficient for everyone who desires them; the imbalance between unlimited wants and limited resources.

Opportunity Cost

The next best alternative forgone when a choice is made between competing options.

Production Possibility Frontier (PPF)

A graph showing the maximum combination of two goods an economy can produce with fixed resources and technology.

Factors of Production

The economic resources used to produce goods and services: Land (rent), Labour (wages), Capital (interest), and Entrepreneurship (profit).

Productivity

A measure of efficiency in production, expressed as output per unit of input (e.g., ext{Labour Productivity} = rac{ ext{Quantity of Output}}{ ext{Quantity of Labour Used}} ).

Price Mechanism

The system in a free market where price is determined by the interaction of demand and supply, signaling to producers what to produce and for whom.

Fixed Cost (TFC)

Payments for fixed factors of production that remain constant regardless of the level of output in the short run.

Marginal Cost (MC)

The addition to total cost resulting from the production of one more unit of output ($MC_n = TC_n - TC_{n-1}$).

Economies of Scale

The cost advantages, such as a fall in long-run average cost, that accrue to a firm as it increases its scale of production.

Joint Stock Company

A business organization owned by shareholders who have limited liability; can be private (Ltd) or public (PLC).

Multinational Corporation (MNC)

A large firm that operates across national boundaries with subsidiaries in host countries and a headquarters in a home country.

Price Elasticity of Demand (PED)

Measures the responsiveness of quantity demanded to a change in price ( ext{PED} = rac{ ext{\% Change in } Q_d}{ ext{\% Change in Price}} ).

Market Structure

The organizational features of a market, such as the number of buyers/sellers and product type, that determine firm behavior.

Perfect Competition

A market structure with many buyers and many sellers, 0 barriers to entry, perfect knowledge, and homogeneous products where firms are price-takers.

Monopoly

A market where there is only one seller and many buyers, offering a unique product with high barriers to entry.

Market Failure

Occurs when the market mechanism fails to allocate resources efficiently, such as in the case of public goods, merit goods, or externalities.

Public Goods

Goods that are non-excludable (cannot stop non-payers from using) and non-exhaustible (one person's use does not reduce availability for others).

Inflation

A steady and continuous rise in the general price level of an economy, often measured by the Retail Price Index (RPI).

Fiscal Policy

The government's use of spending ($G$) and taxation ($T$) to influence aggregate demand in the economy.

Monetary Policy

The central bank's manipulation of interest rates and the money supply to control inflation or stimulate growth.

Gross Domestic Product (GDP)

The total money value of all goods and services produced within a country's borders in a specific time period.

Trade Union

An association of workers formed to protect their interests and negotiate for higher wages and better working conditions through collective bargaining.

Globalisation

The emergence of a single world market characterized by the free movement of goods, people, capital, and ideas across international borders.