economics keywords y10

Allocation of resources

How scarce resources are distributed among producers, and how scarce goods and services are allocated among consumers.

Average cost

The cost of producing a unit (unit cost of production).

Average revenue

The revenue per unit sold.

Balance of payments

The record of all financial transactions between one country and the rest of the world.

Borrowing

To receive money from another party with the agreement that the money will be repaid.

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.

Capital

The factor of production that relates to the human-made aids to production.

Competition

Where different firms are trying to sell a similar product to a consumer.

Consumer

A person or organisation that directly uses a good or service.

Cost of living

The price level of goods and services bought (by the average family).

Currency

The system of money used in a country or group of countries.

Demand

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

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.

Developed country

A country with high GDP per capita and developed industry and service sectors.

Development

The process of increasing people's standard of living and wellbeing over time.

Direct tax

A tax on income or wealth.

Distribution of income

How incomes are shared out between individuals and households.

Distribution of wealth

How wealth is shared out between individuals and households.

Division of labour

Where workers specialise in, or concentrate on, one area of the production process.

Economic choice

An option for the use of selected scarce resources.

Economic growth

Growth in GDP (value of output) over time.

Economic problem

How to best use scarce resources to satisfy the unlimited wants of people.

Economic sustainability

The best use of resources in order to create growth or development for a country, firm or individual, both now and into the future.

Economies of scale

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

Efficiency

The optimal production and distribution of scarce resources.

Elastic demand

When the percentage change in quantity demanded is greater than the percentage change in price.

Elastic supply

When the percentage change in quantity supplied is greater than the percentage change in price.

Employment

The use of labour in the economy to produce goods and services.

Enterprise

The factor of production that takes a risk in organising the other three factors of production.

Entrepreneur

The individual who takes the risk in organising the other three factors of production.

Environmental sustainability

The impact of development or growth where the effect on the natural world is small and possible to manage, now and into the future.

Equilibrium price and quantity

Where the quantity supplied exactly matches the quantity demanded.

Exports

Goods and services sold abroad.

Factor market

Market in which the services of the factors of production are bought and sold.

Factors of production

The resources in an economy that can be used to make goods and services, e.g. land, labour, capital and enterprise.

Financial sector

Consists of financial organisations and their products, and involves the flow of capital.

Fiscal policy

A policy that uses taxation and government spending to affect the economy as a whole.

Frictional unemployment

Lack of employment caused by time lags when workers move between jobs.

GDP per capita

GDP divided by the population.

Good

A tangible product, i.e. a product that can be seen or touched.

Government

A political authority that decides how a country is run and manages its operation.

Gross domestic product (GDP)

The total value added of goods and services produced in the country in a year.

Gross income

Income received before any taxes are taken or benefits given.

Gross pay

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

Imports

Goods and services bought from abroad.

Income

The reward for the service provided by a factor of production, including labour.

Individual demand

The demand for a good or service by an individual consumer.

Individual supply

The supply of a good or service by an individual producer.

Inelastic demand

When the percentage change in quantity demanded is less than the percentage change in price.

Inelastic supply

When the percentage change in quantity supplied is less than the percentage change in price.

Inflation

A sustained rise in the general price level over time.

Insurance company

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

Investment

The purchase of capital goods that are used to produce future goods and services. It is also an asset purchased to provide an income in the future and/or to be sold at a profit.

Labour

The factor of production that is concerned with the workforce of an economy in terms of both the physical and mental effort involved in production.

Labour force (or workforce)

The number of people who work in a country.

Labour market

Where workers sell their labour and employers buy the labour: it consists of households' supply of labour and firms' demand for labour.

Land

The factor of production that is concerned with the natural resources of an economy, such as farmland and mineral deposits.

Law of demand

For most products the quantity demanded varies inversely with its price.

Law of supply

For most products the quantity supplied varies directly with its price.

Level of unemployment

The number of people in the working population who are unemployed.

Loss

When a firm's revenue is less than its costs, i.e. TR<TC.

Market

Any way of bringing together buyers and sellers to buy and sell goods and services.

Market demand

The total demand for a good or service, found by adding together all individual demands.

Market economy

An economy in which scarce resources are allocated by the market forces of supply and demand.

Market forces

Factors that determine price levels and the availability of goods and services in an economy without government intervention.

Market supply

The total supply of a good or service as a result of adding together all individual producers' supplies.

Medium of exchange

Anything that sets the standard of value of goods and services acceptable to all parties involved in a transaction.

Money

Anything that is generally accepted as a means of payment for goods and services.

Monopoly

A sole producer or seller of a good or service.

Movement along the demand curve

When the price changes, leading to a movement up or down the existing demand curve.

Movement along the supply curve

When the price changes, leading to a movement up (expansion) or down (contraction) on the existing supply curve.

Net income

Income available after the effect of direct taxes and benefits, often called disposable income.

Net pay

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

Oligopoly

Where a small number of firms control the large majority of market share.

Opportunity cost

The next best alternative given up when making a choice.

Price

The sum of money paid by a consumer to a producer for a good or service. It is determined by the interaction of supply and demand.

Price elasticity of demand (PED)

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

Price elasticity of supply (PES)

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

Price stability

When the general level of prices stays constant over time, or grows at an acceptably low rate.

Producer

A person, company or country that makes, grows or supplies goods and/or services.

Production

The total output of goods and services produced by a firm or industry in a time period.

Productivity

One measure of the degree of efficiency in the use of factors of production in the production process. It is measured in terms of output per unit of input.

Product market

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

Profit

The difference between the revenue received from the sale of a good or service and the costs involved in making and/or selling the good, including any opportunity costs.

Rate of inflation

The percentage rise in the general price level over time.

Rate of interest/interest rate

The cost of borrowing money, i.e. that which is paid to the lender. It is also the reward for saving.

Rate of unemployment

The percentage of the country's workforce that is unemployed.

Recession

A period of time when the country's GDP falls for two (or more) consecutive quarters.

Saving(s)

The part of a person's (disposable) income which is not spent on consumption.

Scarce resources

When there is an insufficient amount of something to satisfy all wants.

Service

An intangible product, i.e. a product that cannot be seen or touched.

Shift of the demand curve

A complete movement of the existing demand curve either outward (to the right) or inward (to the left).

Shift of the supply curve

The complete movement of the existing supply curve either outward (to the right) or inward (to the left).

Specialisation

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

Structural unemployment

Unemployment caused by a permanent decline of an industry or industries.

Subsidy

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

Supply

The ability and willingness of firms to provide goods and services at each price in a given time period.

Supply of labour

The total number of people who are willing and eligible to supply their labour, including the unemployed.

Tax

A compulsory payment to the government.

Total cost

All the costs of the firm added together.