The quantity of goods/services producers are willing and able to buy at a given price

A person/company/country that supplies goods and services

Price at which the quantity supplied equals the quantity demanded.

Quantity supplied is greater than quantity demanded. There are unsold products in the market.

Price elasticity of demand (PED)

measures the responsiveness of quantity demanded to a change in price

Price elasticity of supply (PES)

measures the responsiveness of quantity supplied to a change in price

Income elasticity of demand

measures the responsiveness of quantity demanded to a change in income

Goods for which demand will increase (decrease) as income increases (decreases).

Goods for which demand will increase (decrease) as income decreases (increases).

A good which income elasticity of demand is greater than 1 and the proportionate change in quantity demanded is greater than the proportional change in income

Government provision of goods/services in an economy

provision of goods and services by businesses that are owned by individuals or groups of individuals

goods that are not likely to be provided by the private sector

the sale of state-owned resources from the public sector to the private sector

External costs/Negative externalities

Negative spillover effects on third parties due to consumption or production

Positive spillover effects from the production or consumption of a good/service which allow third parties to benefit

Rewards to individuals who are involved in the economic activities of consumption or production

Private benefits + external benefits

when a person enjoys the benefit of a good without paying for it

Process that involves converting resources into goods or services

Factors of production

resources used for production, e.g. land, labour, capital, enterprise

The provision of services in the economy

The amount of output produced in relation to the resources used

When a firm breaks up the production process being split into small tasks so that each worker can specialise on a single part of the production process.

Total fixed costs + total variable costs

costs that do not vary with the level of output

costs that change when output levels change

Average (total) costs

Total costs divided by quantity

Total revenue minus total costs

Occurs when average costs decrease in the long run as a firm expands with increase in production.

Technical economies of scale

when larger firms can make better use of machinery than smaller ones, resulting falling average costs

Internal economies of scale

Reduced average costs enjoyed by firms that expand, e.g. bulk buying, marketing, technical

Diseconomies of scale

Rising average costs in the long run because a firm grows too large

Sellers aim to increase sales and profits by attracting customers from rivals in the market

A specialised market for a particular product

An idea which leads to a new product/process

A market structure with one dominant seller in the market

A dominant firm sets the price in the market

Obstacles that make it difficult for a new firm to enter a market

A good/service for which there is no substitute

A market structure where there are a few dominant large firms.

Paper 1 Micro Economics Concepts Flashcards Flashcards

Student preview

58 questions

Show all answers

1.

FLASHCARD QUESTION

Front

Scarcity

Back

where there are unlimited wants and finite resources, leading to the need to make choices

2.

FLASHCARD QUESTION

Front

Wants

Back

The desire for goods and services

3.

FLASHCARD QUESTION

Front

Opportunity cost

Back

the next best alternative given up when a choice is made

4.

FLASHCARD QUESTION

Front

Production possibility curve

Back

shows the combination of goods that can be produced with all available resources and the maximum productive potential of an economy.

5.

FLASHCARD QUESTION

Front

Demand

Back

The quantity of goods/services consumers are willing and able to buy at a given price

6.

FLASHCARD QUESTION

Front

Demand curve

Back

shows how much of a good will be purchased at different prices

7.

FLASHCARD QUESTION

Front

Substitute

Back

goods which are used as an alternative to another good

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