commerce year 10 term 1 terms

Economics

The study of how individuals, businesses, and governments use limited resources to satisfy unlimited wants

Scarcity

The basic economic problem where there are limited resources but unlimited human wants

Opportunity Cost

The value of the next best alternative that is given up when making a choice

Needs

Things necessary for survival such as food, water, and shelter

Wants

Things people desire but do not need to survive such as phones or entertainment

Resources (Factors of Production)

The inputs used to produce goods and services

Land

Natural resources used to produce goods and services

Labour

Human effort used in the production of goods and services

Capital

Man-made tools, machines, and equipment used to produce goods and services

Entrepreneurship

The ability to organise resources and take risks to start and run a business

Circular Flow of Income

A model showing how money, goods, and services move between households and businesses in an economy

Households

Individuals who provide labour and receive income

Businesses (Firms)

Organisations that produce goods and services

Income

Money households receive from wages, rent, interest, or profit

Goods and Services

Products and activities produced to satisfy wants and needs

Leakages

Money leaving the circular flow such as savings, taxes, and imports

Injections

Money entering the circular flow such as investment, government spending, and exports

Market

A place where buyers and sellers interact to exchange goods and services

Demand

The quantity of a good or service consumers are willing and able to buy at different prices

Law of Demand

As price increases demand decreases and as price decreases demand increases

Supply

The quantity of a good or service producers are willing and able to sell at different prices

Law of Supply

As price increases supply increases and as price decreases supply decreases

Equilibrium Price

The price where supply equals demand in a market

Surplus

When supply is greater than demand

Shortage

When demand is greater than supply

Price Mechanism

The system where prices adjust based on supply and demand

Economic Growth

An increase in the production of goods and services in an economy over time

Gross Domestic Product (GDP)

The total value of goods and services produced in a country in one year

Real GDP

GDP adjusted for inflation

Productivity

The efficiency of production often measured as output per worker

Standard of Living

The level of wealth comfort and goods available to people

GDP Growth Rate

The percentage increase in GDP over time

Unemployment Rate

The percentage of people who are able and willing to work but cannot find a job

Inflation Rate

The rate at which prices of goods and services increase over time

Consumer Price Index (CPI)

A measure used to track inflation by monitoring price changes in a basket of goods

Positive Effects of Economic Growth

Higher employment higher incomes improved living standards and more government revenue

Negative Effects of Economic Growth

Environmental damage inflation income inequality and overuse of resources

Government Intervention

When the government becomes involved in the economy to correct problems or achieve economic goals

Economic Objectives of Government

Economic growth low unemployment low inflation external stability and fair distribution of income

Market Failure

When the market does not allocate resources efficiently

Public Goods

Goods provided by the government that everyone can use such as roads or defence

Externalities

Side effects of economic activity that affect others such as pollution

Regulation

Laws and rules that control how businesses operate

Taxes

Money collected by the government to fund public services

Subsidies

Financial support given by the government to businesses or industries