Stage 1 Economics Exam Revision

These flashcards cover key vocabulary and concepts from Stage 1 Economics for exam revision.

Economic Problem

The challenge of satisfying unlimited wants with scarce resources.

Scarcity

The limited availability of resources in comparison to unlimited wants.

Opportunity Cost

The forgone benefit that arises from choosing one option over others.

Production Possibilities Curve (PPC)

A graph that shows the maximum combinations of two goods that can be produced with available resources.

Equilibrium

The state in a market where the quantity supplied equals the quantity demanded.

Demand

The quantity of a good or service that consumers are willing and able to buy at a given price.

Law of Demand

As the price of a good increases, the quantity demanded decreases.

Supply

The quantity of a good or service that producers are willing and able to sell at a given price.

Law of Supply

As the price of a good increases, the quantity supplied increases.

Elasticity

A measure of how much the quantity demanded or supplied of a good responds to changes in price.

Perfect Competition

A market structure where many firms supply indistinguishable products, with no single firm influencing the price.

Monopolistic Competition

A market structure in which many firms sell products that are similar but not identical.

Oligopoly

A market structure dominated by a small number of firms, limiting competition.

Natural Monopoly

A market situation where a single firm can supply the entire market at a lower cost than multiple firms.

Duopoly

A type of oligopoly where only two firms dominate the market.

Price Mechanism

The process by which the forces of supply and demand interact to set the price of goods and services.

Shifts in Demand and Supply

Changes in market conditions that cause the demand or supply curve to move.

Factors of Demand

Elements such as income, price of substitutes, and consumer preferences that affect demand.

Factors of Supply

Elements such as production costs, availability of resources, and technology that affect supply.

Market Structures

Various organizational forms of markets classified by the number of firms and their behavior.