Studied by 1 personNeeds - 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
Note 
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