Economics

Goods

Things that are produced in order to be sold

Finite

Having an end or a limit

Infinite

Without limits

Needs

Basic requirements for human survival

Wants

People's desires for goods and services

Basic economic problem

Allocation of a nation's scarce resources between competing uses that represent infinite wants

Scarce resources

Amount of resources available when supply is limited

Choices

Deciding between alternative uses of scarce resources

Opportunity cost

Cost of the next best alternative given up (when making a choice)

Factors of production

The inputs available to supply goods and services in an economy (Capital, Enterprise, Land, Labour)

Expenditure

Spending by a government, usally a national government

Production possibility curve (PPC)

Line that shows the different combinations of two goods an economy can produce if all resources are used up

Capital goods

Those purchased by firms and used to produce other goods such as factories, machinery, tools and equipment

Consumer goods

Those purchased by households such as food, confectionery, cars, tablets and furniture

Economic growth

Increase in the level output by a nation

Variables

Something that affects a situation in a way that means you cannot be sure what will happen

Irrational

Not based on clear thought or reason

Rational

Based on clear thought or reason

Private Benefits

Benefits that accrue to an individual or firm through economic activity

Maximise

To increase something such as profit, satisfaction or income as much as possible

Revenue

Money that a business receives over a period of time, especially from selling goods or services

Profit

The difference between revenue and costs over a period of time

Enterprises

Companies, organisations or businesses

Administration

Activities involved with managing and organising the work of a company or organisation

Quantify

Express in numbers

Demand

The amount of goods and services that consumers are willing and able to buy over a period of time

Demand curve

Line drawn on a graph that shows how much of a good will be bought at different prices

Demand schedule

Table of the quantity demanded of a good at different price levels - can be used to calculate the expected quantity demanded

Effective demand

Amount of a good people are willing to buy at given prices over a given period of time supported by the ability to pay

Inverse relationship

(Between price and quantity demanded) When price goes up, the quantity demanded falls and when the price goes down the quantity demanded rises

Shift in the demand curve

Movement to the left or right of the entire demand curve when there is a change in any factor affecting demand except the price

Factors that may shift the demand curve

Advertising, income, fashion and tastes, price of substitutes, price of complements and demographic changes

Disposable income

Income that is available to someone over a period of time to spend; it includes state benefits but excludes direct taxes

Normal goods

Goods for which demand will increase if income increases or fall if income falls

Inferior goods

Goods for which demand will fall if income rises or rise if income falls

Substitute goods

Goods bought as an alternative to another but perform the same function

Complementary goods

Goods purchased together because they are consumed together

Supply

Amount that producers are willing to offer for sale at different prices in a given period of time

Supply curve

Line drawn on a graph which shows how much of a good sellers are willing to supply at different prices

Proportionate relationship

(between price and the quantity supplied) When the price goes up, the quantity supplied also goes up and when the price goes down the quantity supplied goes down

Shift in the supply curve

Movement to the left or right of the entire supply curve when there is any change in the conditions of supply except the price

Ventures

New business activities or projects that involve taking risks

Factors that cause the supply curve to shift

Production costs, Natural factors, New technology, Subsidies, Indirect taxes

Indirect taxes

Taxes levied on spending, such as VAT

VAT

Value-added tax

Productivity

Rate at which goods are produced, and the amount produced in relation to the work, time, and money needed to produce them

Consumption

Amount of goods, services, energy, or natural materials used in a particular period of time

Subsidy

Money that is paid by a government or organisation to make prices lower, reduce the cost of producing goods or providing a service, usually to encourage production of a certain good

Equilibrium price

Price at which supply and demand are equal

Market clearing price

Price at which the amount supplied in a market matches exactly the amount demanded

Total revenue

Amount of money generated from the sale of goods calculated by multiplying price by quantity

Excess demand

Where demand is greater than supply and there are shortages in the market

Excess supply

Where supply is greater than demand and there are unsold goods in the market