revision

Consumer Role

Buys goods and services, provides information to producers, and pays indirect taxes.

Consumer Sentiment

A mathematical measure of the health of the economy based on consumer spending habits.

Law of Diminishing Marginal Utility

The idea that as more units of a good are consumed, the marginal utility decreases.

Equi-Marginal Principle

A consumer spends their income so that the ratio of marginal utility to price is equal across all goods.

Demand

The number of units of goods and services a consumer wants to buy at various prices.

Law of Demand

An increase in price leads to a decrease in quantity demanded or vice versa.

Derived Demand

Demand not for its own sake but as an essential part of another product.

Composite Demand

When a commodity is required for a number of different uses.

Joint Demand

When the demand for one product is joined with the demand for another product.

Complementary Goods

Goods that are used jointly.

Substitute Goods

Goods that satisfy the same needs and can be considered alternatives.

Normal Goods

A good that obeys the law of demand and has a positive income effect.

Inferior Goods

A good with a negative income effect.

Giffen Goods

Goods with a positive price effect; more is bought as the price rises.

Supply

Quantity of a good firms are willing to make available at various prices.

Market/Aggregate Supply

Quantity of a good supplied by all firms in the market at different prices.

Law of Supply

As price increases, quantity supplied increases.

Fixed Supply

Supply where quantity of a product cannot be changed in the short term.

Price Mechanism

Means by which decisions are taken by consumers and firms to allocate scarce resources.

Signaling Function

Changes in price provide information about the changing nature of markets.

Transmission of Preferences Function

Consumer demand transmits information about consumer preferences to suppliers.

Rationing Function

When a shortage of a product occurs, prices rise, discouraging some consumers.

Consumer Surplus

The difference between what consumers actually pay and what they are willing to pay.

Producer Surplus

The difference between the price a seller receives and the price they would have accepted.

Rent Pressure Zones (RPZ)

Areas identified where rent increases are restricted by the government.

Full Employment

Exists when everybody in the labor force, who is willing and able to work, is employed.

Unemployment

All those seeking work at existing wage rates but unable to find work.

Employment Rate

All the people in the labor force who are currently employed; the proportion currently employed.

Frictional Unemployment

People who are between jobs and looking for work.

Seasonal Unemployment

Occurs when some members of the workforce are in employment for only a certain period of the year.

Cyclical Unemployment

Results from reduced demand for goods and services during an economic recession.

Structural Unemployment

Refers to those who become unemployed because their skills are no longer in demand.

Institutional Unemployment

Arises because there are obstacles preventing the mobility of labor.

Systemic Crisis

A crisis that threatens the entire country’s economic system.

Underemployment

A situation whereby a factor of production, though not actually unemployed, is working below their capacity or skill level.

Live Register

Used to provide a monthly series of data on those claiming job seekers allowance

Labour productivity

Measures the output that is produced by a worker per period of time

Balanced Regional Development

Aimed at ensuring that all regions share in the economic growth of the country

Artificial Intelligence (AI)

The intelligence of machines and software.

Factors of production

Land, labour, capital, and enterprise. All businesses require one or more of these to operate.

Goods and service market

Market for goods and services consumers purchase for their own use.

Factor market

Market for any of the four factors of production, arising due to demand.

Land (as a factor of production)

Anything provided by nature that helps in the production of output.

Social capital

Refers to assets/wealth owned by the community or society in general, e.g., hospitals, parks, roads.

Working capital

Includes all finished goods, work-in-progress goods, and stocks of raw materials.

Fixed capital

Stock of fixed assets, such as plant, equipment, and tools.

Private capital

Assets owned by individuals, e.g., computers, cars.

Marginal efficiency of capital (MEC)

Extra profit earned as a result of employing one extra unit of capital.

Enterprise

Factor of production that organizes other factors to produce a good or service and takes on risk.

Labour

Human activity directed towards the production of wealth; payment is the wage.

Economic rent

Excess amount earned above the supply price; supply price is the price required to bring a factor into production.

Marginal Revenue Productivity (MRP)

Extra revenue earned when an additional unit of a factor is employed.

Labour Hoarding

Continuing to employ labour even though it is unprofitable.

Marginal physical product (MPP)

The extra output produced when an additional unit of a factor of production is employed.

Labour productivity

Measures the output produced by a worker per period of time.

Full employment

Situation where everyone who wants a job can find one at existing wage rates.

Gender pay gap

Difference in average gross earnings of female and male employees.

The So Called ‘Glass Ceiling’

Leadership positions in many firms and many areas of society is dominated by male.