economics unit1 aos1

Australian Competition and Consumer Act 2010 (ACCA)

Legislative framework that prohibits anti-competitive conduct, including price fixing and collusive behaviour among firms.

Australian Competition and Consumer Commission (ACCC)

Statutory authority responsible for promoting competition and enforcing compliance with competition and consumer laws.

Behavioural economics

Field of economics that incorporates psychological insights to explain deviations from fully rational decision-making, including bounded rationality and cognitive biases.

Boom

Phase of the business cycle characterised by maximum productive capacity, excess aggregate demand, and upward pressure on price levels.

Business behaviour

Analysis of firm decision-making processes, typically assuming profit maximisation through cost minimisation and revenue optimisation.

Business cycle

Recurring fluctuations in economic activity consisting of expansion, peak, contraction, and trough.

Capital resources

Produced means of production such as machinery, equipment, and infrastructure used in further production.

Consumer behaviour

Study of how individuals allocate income to maximise utility through consumption choices.

Consumer/household sector

Sector comprising individuals who supply factors of production and demand goods and services.

Consumer sovereignty

Principle whereby consumer preferences determine resource allocation through price signals.

Contraction

Phase marked by declining GDP, rising unemployment, and reduced inflationary pressure.

Cost-benefit analysis

Systematic evaluation comparing total expected costs and total expected benefits of a decision.

Disincentives

Policy measures such as taxes or regulations designed to discourage certain behaviours.

Economic activity

Use of resources to produce goods and services, influencing inflation and unemployment.

Economic agents

Decision-making units in the economy including households, firms, and government.

Economics

Social science concerned with allocating scarce resources to satisfy unlimited wants.

Economic stabilisation

Maintaining steady economic growth with stable inflation and unemployment.

Economic system

Framework through which production, distribution, and consumption are organised.

Expansion

Phase of rising economic activity with increasing output and falling unemployment.

Free markets

System where resource allocation is determined by the price mechanism without government intervention.

Government/public sector

All levels of government responsible for economic policy, regulation, and public services.

Gross Domestic Product (GDP)

Total monetary value of final goods and services produced within an economy over a period.

Incentives

Factors that motivate changes in behaviour through rewards or benefits.

Indirect taxes

Taxes on goods and services that increase prices and discourage consumption.

Labour resources

Human effort used in production, including physical and intellectual contributions.

Living standards

Measure of wellbeing including material consumption and non-material quality of life.

Macroeconomics

Study of aggregate economic variables such as GDP, inflation, and unemployment.

Marginal utility

Additional satisfaction gained from consuming one extra unit of a good or service.

Microeconomics

Study of individual consumers, firms, and markets.

Mixed economy

System combining market forces with government intervention.

Natural resources

Inputs from nature such as land, minerals, and water.

Needs

Essential goods and services required for survival.

Normative economics

Value-based analysis concerning what ought to occur.

Opportunity cost

Value of the next best alternative forgone when making a choice.

Planned obsolescence

Strategy where products are designed to have a limited lifespan to encourage repeat purchases.

Positive economics

Objective analysis based on facts and evidence.

Producer/business sector

Firms that organise resources to produce goods and services.

Production possibility diagram (PPD)

Graph showing possible combinations of two goods that can be produced.

Production possibility frontier (PPF)

Curve showing maximum efficient output combinations.

Productive capacity

Maximum output an economy can produce with available resources.

Profit maximisation

Goal of achieving the greatest possible difference between revenue and costs.

Purely planned economy

System where government makes all economic decisions.

Pure market economy

System where markets determine all economic decisions.

Recession

Period of declining economic activity, typically two consecutive quarters of negative GDP growth.

Redistribution of income

Government policies aimed at reducing income inequality.

Relative prices

Price of one good expressed in terms of another.

Relative scarcity

Limited resources relative to unlimited wants requiring choices.

Resources

Factors of production including land, labour, and capital.

Scarcity

Condition where resources are insufficient to meet all wants.

Subsidies

Government payments encouraging production or consumption.

Tax rebates

Reductions in tax liability to encourage certain behaviours.

Three basic economic questions

What to produce, how to produce, and for whom to produce.

Three-sector circular flow model

Model showing interactions between households, firms, and government.

Trade-off

Situation where one benefit is gained at the expense of another.

Traditional economy

System where decisions are based on customs and traditions.

Wants

Non-essential desires that improve quality of life.

Act rationally with self-interest

Economic agents are assumed to behave in a manner that systematically maximises their own utility or benefit through logically consistent evaluation of available choices.

Ordered preferences

Individuals are assumed to possess a complete and transitive set of preferences, enabling them to consistently rank all possible options without contradiction.

Informed decision-making

Decision-making is undertaken with access to perfect or near-perfect information, allowing individuals to accurately assess all relevant costs and benefits.

Marginal benefits from consumption

Choices are determined through marginal analysis, where individuals compare the incremental benefit derived from consuming an additional unit with the associated marginal cost.