econ

Needs - Necessities required for living

Wants - Not a necessity but something you would like to survive

Production - The process of turning inputs into goods and services

Consumers - Someone that buys goods and services

Producers - A person or company that makes goods or services to sell

Factors of production - The inputs used to produce goods and services

Land - All natural resources used to produce goods and services

Labour - The people used in production

Capital - Man made goods used in the production process

Enterprise - The person organising factors of production

Opportunity cost - The best next alternative forgone

Markets - The process by which the prices of goods and services are determined

Factor markets - The buying and selling of land, labour and capital

Product markets - A market where goods and services are bought and sold and prices are determined by the interaction of demand and supply

Scarce resources - The limited availability of economic resources

Primary sector - Industries involved in production or extraction of natural resources

Secondary sector - Manufacturing industries that convert raw materials into finished goods

Tertiary sector - Industries that provide services

Specialisation - Where a country, business or worker focuses on the production of a limited range of products in order to gain efficiency

Division of labour - Where workers specialise in one particular task of the production process

Exchange - Where buyers and sellers come together in a market place to negotiate prices

Demand - A consumers desire, willingness and ability to pay a price for a specific good or service

Demand curve - Graph that shows the different quantity of product demanded at different price levels

Shift in demand curve - Factors other than price causing demand to change

Movement along the demand curve - Price changes that cause demand to change

Supply - The amount of a product that producers and firms are willing to sell at a given price

Supply curve - Graph that shows the different quantity of product supplied at different price levels

Shift in supply curve - Factors other than price causing supply to change

Movement along the supply curve - Price changes that cause supply to change

Equilibrium price - The point at which quantity demanded and quantity supplied are equal

Revenue - Income received from sale of goods or services

Excess demand - When quantity demanded exceeds quantity supplied, resulting in shortages and higher prices

Excess supply - when the quantity supplied exceeds the quantity demanded, resulting in excess products and lower prices

Complements - A good or service that is used in conjunction with another good or service.

Substitutes - Goods and services that can be used to replace each other

Price elasticity of demand - The responsiveness in quantity demanded to a change in price

Price elastic demand - When PED is greater than 1 and quantity demanded is very responsive to a change in price

Price inelastic demand - When PED is less than 1 and quantity demanded is not very responsive to a change in price

Price elasticity of supply - The responsiveness in quantity supply to a change in price

Price elastic supply - When PES is greater than 1 and quantity supplied is very responsive to a change in price

Price inelastic supply - When PES is less that 1 and quantity supplied is not very responsive to a change in price

Business objectives - Specific and measurable targets set in order to meet the aims of the business

Costs - The costs experienced when running a business

Revenue (production) - Amount of income received by a business over a given time

Profit - The difference between total revenue and total cost

Total costs - The sum of fixed and variable costs

Average costs - The cost to produce one product. Toal costs divided by quantity

Fixed costs - Costs that do not vary with the quantity of output produced

Variable costs - Costs that vary with the quantity of output produced

Total revenue - Total money received by a business over a given amount of time

Average revenue - Total revenue divided by the quantity sold, same as the selling price

Productivity - The measure of output per unit of input

Production - The transformation of inputs into goods or services

Economies of scale - The cost per unit made declines with an increase in the number of units produced

Diseconomies of scale - The cost per unit made increases with an increase in the number of units produced

Managerial economies of scale - A firm can attract the best staff into the company

Purchasing economies of scale - A reduction in unit costs as a result of buying in large quantities; these are sometimes called buying economies of scale.

Financial economies of scale - The firm has a cheaper access to borrowing money

Technical economies of scale - Can afford the most efficient machinery or capital equipment

Risk-bearing economies of scale - Ability of firms to spread its risk over a large number of areas

Market structures - How markets operate to allow buyers and sellers to come together

Product differentiation - How firms make their goods or services different to those of its competitors

Competitive markets - Market structures that have a great deal of competition between producers

Monopoly - When there is only one provider of a particular good or service

Oligopoly - When few dominant firms have a large market share of a particular market

Gross pay - Total pay before deductions are taken off

Net pay - Total pay after deductions have been made

Market failure - When markets fail to act properly and resources are not allocated efficiently

misallocation of resources - Where land, labour and capital are not used as efficiently as possible

Market system - Where buyers and sellers come together to agree on quantity and prices of goods and services

Government intervention - Where governments intervene to correct market failure

Externalities - Costs (or benefits) arising from the decisions of an individual which impact on people other than the individual

Positive externalities - Positive affect received by a third party resulting from a transaction in which they had no direct participation

Negative externalities - Occurs when a product or decision costs the society more than its private cost.

Social costs & benefits - The costs and benefits of a company or individuals impact on the environment and society for which they are not financially responsible

Private costs & benefits - The costs and benefits received by the firm that produces the good or service

Basic economic problem

the gap between scarce resources and the unlimited wants for them

Market economy

the forces of supply and demand allocate resources via the price mechanism. All resources are privately owned and there is no government intervention

Planned economy

the government allocates all resources via the price mechanism. All resources are owned by the government and they control prices

Mixed economy

some resources are owned and allocated by private individuals and the government owns and allocates others

Public sector

the government sector of the economy, where organisations are owned and run by the government

Private sector

the sector of the economy where firms are owned and run by private individuals and groups - their main aim is profit maximisation

Factors of production

resources used in the production process

Capital

goods used to produce other goods and services

Enterprise

having ideas and taking risk, with a reward of profit

Labour

human input into the production process

Land

physical land itself as well as all the natural resources and raw materials above/below the land which are available for production

Opportunity cost

the next best alternative forgone when an economic choice is made

Economic sustainability

considers how an economic choice ensures the best and most responsible use of scarce resources so that a firm or economy can keep growing over time

Social sustainability

considers the impact of development or growth that promotes an improvement in quality of life, now and into the future

Environmental sustainability

considers how an economic choice impacts renewable and non-renewable resources, pollution, climate change and the availability of resources, now and into the future

Primary sector

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

Secondary sector

the conversion of raw materials into goods; it includes all manufacturing and construction activities

Tertiary sector

the provision of a service

Market

where buyers and sellers meet to exchange goods and services

Factor market

where the services of the factors of production are bought and sold

Product market

where final goods and services are bought and sold

Derived demand

the demand for a factor of production not for itself, but is dependent on the demand for the product it is used to produce

Specialisation

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

Division of labour

where each worker concentrates on only one small aspect of the production process