Y11 Economics - Ch5, 6 and 9 Revision

places where buyers and

sellers actually meet to exchange goods

and services

situations in which goods and services are exchanged without the buyers

and sellers meeting or needing to be in the same place to physically interact

the pressure that market

forces place on businesses to reduce prices

and improve the quality of their products

the ability of

an economy to achieve the maximum

quantity of output from a given quantity of

productive resources

the cost-saving

advantages that a firm gains by increasing

its scale of production

occurs where a country’s

productive resources are used in the economy

in combinations that generate the maximum

benefits for consumers and the country

once

the most efficient level of production has been

reached, adding an extra factor of production

(such as a new employee) will cause a

relatively smaller increase in output than that

gained from each existing factor of production;

the marginal productivity will decrease

the ability of an

economy to respond to changing consumer

demands by reallocating resources to new

industries or production processes

the market situation in which a

small number of firms are selling similar but

not identical products

a theoretical market

structure in which many buyers and sellers

trade a homogenous product, there are

no barriers to entering the market and all

producers are price takers

the market

situation in which a large number of buyers

and sellers are exchanging similar but not

identical products

the market situation in which

one seller sells a product for which there

is no close substitute, allowing it to be the

price setter

a private good with

negative externalities

goods such as national

defence, a beach or road that are non-rival

(consumption does not reduce quantity) and

can be consumed by people that are not

paying for the good

indirect costs and benefits

associated with the production and

consumption of certain goods and services

that the market fails to take into account;

these benefits or costs are imposed on a

third party, who normally cannot pay or be

compensated for them through the market

mechanism

the inability of the market

to determine the use and allocation of

resources in the way society most desires,

because certain conditions are lacking, for

example, limited market power, externalities

and public goods

a good or service that is not

produced in sufficient quantities by markets

because individuals do not value them

highly enough to pay for them; a private

good with positive externalities

a process of imposing a set of

government laws and rules on a market

a product or service

provided by the business sector for use

and consumption by individual consumers,

usually for personal benefit and utility

a process of removing a set

of government laws and rules imposed on

a market

a product or service

provided by the government sector for

societal use and benefit, usually in response

to a market unable to supply that product or

service at a reasonable cost

when consumers

or firms in a society can derive a benefit

from the consumption of a good or service

without having contributed directly to the

cost of that good or service

a form of taxation that is

imposed on any commercial activity in

a marketplace that produces negative

externalities; the purpose of the tax is

to correct a suboptimal and socially

undesirable outcome

the overuse or

destruction of a common property good

because it has no price and so markets do

not ration its consumption

legislated measures

created by government to administer the

ownership, uses and disposal of property

and resources

a government

tool where allocated pollution permits are

created, allowing firms to emit a certain

amount of pollution; these permits are then

tradeable on an open market between

competing firms

payments to households in the

form of wages, rent, interest and profit

total assets owned by an

individual or income unit, and the nation

at any one time; includes physical

assets such as real estate and consumer

durables (car, boat, jewellery) as well

as financial assets (shares, bonds,

debentures)

payments to employees as a

return for the provision of labour or human

effort to the production process (usually

calculated on the basis of actual production

or hours worked)

allocation of returns

(rent, wages and salaries, interest, profit)

from the four factors of production (land,

labour, capital, enterprise) among the

population of the country

the degree to which

income is unevenly distributed among

people in the economy

payments received

by individuals and families from the

federal government in the form of cash

social service benefits, such as pensions,

unemployment benefits and family

allowances

payments to higher level

employees and professionals, calculated

on an annual basis, not usually related

to production achieved or hours

worked

the price paid for the use of capital

payments in return for the use of

land or other natural resources used in the

production process

the price paid for the use of capital,

usually expressed as an annual percentage

of the value of the capital