Economics topic 2.1 - 2.4 OCR

market

way of bringing together buyers and sellers to buy and sell goods and services

types of economies

command economies - govt. controls the market

free market - no government

mixed economy - free market yet government will intervene

market economy

an economy in which scarce resources are allocated by the market forces of demand and supply

planned economy

the allocation of scarce resources is controlled by the state

primrary sector

the direct use of natural resources, such as the extinction of basic materials and goods from land and sea

secondary sector

all activities in an economy that are concerned with eithher manafacturing or construction

tertiary sector

all activities in an economy that involve the idea of a service

production of goods

involves using raw materials and/or semi-finished goods to make a whole good

production of services

process of providing a service to a consumer

factor market

market in which the services of the factors of production are bought and sold

derived demand

demand for the factors of production

product market

market in which final goods or services are offered to consumers, business and the public sector for sale

division of labour

where workers specialise in, or concentrate on, one area of the production process

specialisation

the process by which individuals, firms, regions and whole economies concentrate on producing those products that they are best at producing

exchange

the giving up of something that the individual or firm has, in return for something you wish but do not have

demand

the willingness and ability to purchase a good or service at the given price in a given time period

effective demand

shows how much would be bought at any price

individual demand curve

demand for a good or service by an individual consumer

market demand

total demand for a good or service in a given time period

supply

willingness and ability of a producer to make and sell a good/service ata given price at a given point in time

individual supply

the supply of one individual firm

market supply

total supply of a specific good or service. This is found by adding together all the individual producers’ supply

subsidy

a grant given by the government for a producer to produce something

price

sum of money you have to pay for a good or service. It is usually determined by the interaction of supply and demand

worth

how much you value something. This canvary from person to person and is subjective

cost

how much a producer spends to provide a good or service

market equilibrium

a situation in which the quantity of a good or service equals the quantity demanded by consumers

excess demand + excess supply

tells us that the market is in disequilibrium and prices should either increase or decrease

efficiency

the optimal production and sitribution of scarce resources

market forces

factors that determine price levels and the availability of goods and services in an economy without government intervention

elasticity

measures the sensitivity of one variable to a given change in another variable

PED

trsposiveness of quantity demanded to a given change in price at a particular time

elastic demand

when the percentage change in quantity demanded is greater than the percentage change in price. Values from -1 to -infinity

inelastic demand

when the percentage change in quantity demanded is less than the percentage change in price. Values from 0 and -1

PES

resposiveness of quantity supplied to a change in the price of the product