Micro Key Terms Revision

This occurs where the price of a good is higher than the equilibrium price, such that the quantity supplied is greater than the quantity demanded.

• Excess supply

• Excess demand

This occurs where the price of a good is lower than the equilibrium price, such that the quantity demanded is greater than the quantity supplied.

• Excess supply

• Excess demand

A measure of the responsiveness of something to a change in one of its determinants.

• Elasticity

• Equilibrium

The productive units in the economy that turn the factors of

production into goods and services.

• Government

• Firms

• Household

The groups of individuals in the economy who perform two functions. They are the consumers of goods and services and they are the owners and providers of the factors of production that are used to make the goods and services.

• Government

• Firms

• Household

The investment, government expenditure and export revenues that add spending to the circular flow of income.

• Injections

• Leakages

• Lorenz curve

The savings, taxes and import expenditure that remove spending from the circular flow of income.

• Injections

• Leakages

• Lorenz curve

As the price of a good falls, the quantity demanded will normally increase.

• Law of supply

• Law of demand

As the price of a good rises, the quantity supplied will normally rise.

• Law of demand

• Law of supply

The extra benefit/utility to society of consuming an additional unit of output, including both the private benefit and the external benefit.

• Marginal social cost (MSC)

• Marginal propensity to tax (MPT)

• Marginal social benefit (MSB)

• Marginal propensity to save (MPS)