Economics Definitions

good

A tangible product

Service

an intangible product

Consumer

A person or organization that directly uses a good or service

Production

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

Producer

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

Government

A political authority that decides how a country is run and manages operations

Interdependence

Where one group responds to the actions of another group

factors of production

The resources in an economy that can be used to make goods and services

Labour

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

land

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

Capital

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

Enterprise

The factor of production that takes a risk in organising the three factors of production. The individual who takes this risk is known as an entrepreneur

Scarcity of resources

Virtually all resources are scarce ie. there is not enough for everyone to have everything they want

Economic problem

economic choice

Economic sustainability

Social sustainability

Environment sustainability

opportunity cost

The next best alternative when given a choice

market

a place where buyers and sellers meet to exchange money for goods or services

market economy

Primary sector

Involved in the extraction of raw materials or the growing of crops. Economic activity in this sector includes agriculture, mining, fishing, forestry

Secondary sector

Secondary sector activity involves converting primary products e.g. wood or metal into finished goods. Activities in this sector include manufacturing, packaging, carpentry, refinery, construction, food processing.

Tertiary Sector

Tertiary sector activities are services that businesses provide for consumers. This involves selling such as retailing; advertising; transport; physio and other health services; cleaning.

-> Commercial services

factor market

product market

Interdependence (part 2)

Firms rely on other businesses in different sectors for raw materials, components or distribution

exchange

Specialisation

division of labor

demand

The quantity of a good/service that consumers are willing and able to buy at a certain price and at a certain point in time

Individual demand

Market demand

Law of demand

Movement along the demand curve

Shift of the demand curve

subsidy

Tax

elastic demand

Inelastic demand

PED

derived demand

Demand that comes from the demand of other goods

Supply

The quantity of a good or service that a producer is willing and able to sell at a given price and at a point in time

Law of supply

individual supply

Market supply

movement along the supply curve

Shift of the supply curve

Elastic supply

Inelastic supply

PES

Measures the responsiveness of supply following a change in the price of a good

Price

Efficiency

equilibrium price and quantity

Allocation of resources

Determination of price

Market forces

Signaling function

Signalling function

When the price of a good rises, it sends a signal to producers that consumers are likely to want to more of it

Rationing function

The controlled distribution of a scarce good or service

Transmission of preferences

Price changes inform suppliers that consumers are preferring to spend their money in a certain way. It enables suppliers to plan ahead and understand how resources might need to be allocated.

Profit

Excess demand

Occurs when price is set below the equilibrium

Excess supply

Occurs when price is set above the equilibrium

competition

Where different firms are trying to sell a similar product to consumers

Monopoly

A sole producer or seller of a good or service

Oligopoly

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

natural monopoly

VA firm with virtually 100% of the market

legal monopoly

Any firm with at least 25% of the market

profit

the amount of money a producer has left after all the costs have been paid, i.e. when total revenue is greater than total cost

Productivity

Average Cost (AC)

Total Cost (TC)

Total Revenue (TR)

Average Revenue (AR)

Loss

Economies of scale

labour market

Supply of labour

Gross pay

Income tax

National insurance

Net pay

Pension

Money

financial sector

medium of exchange

Investment

Rate of invterest

Building society

Mortgage

Insurance company

economic growth

Gross Domestic Product (GDP)

GDP per capita

Boom

Recession

Labour force/workforce

employment