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Introduction to econ
Supply, demand
| Question | Answer |
|---|---|
| Positive statement | A viewpoint which can be tested, fact. |
| Normative statement | A viewpoint which is opinionated without evidence |
| Is "The crime rate is higher in the UK then other countries" a positive or normative statement? | Positive |
| Need | Something people must have, that they cannot do without, e.g. food |
| Want | Something people would desire but which is not essential for survival e.g. PS4 |
| Fundamental economic problem | The idea that there are scarce resources to allocate to the unlimited quantity of goods and services people desire. |
| What is used to decide the economic problem? | What to produce? How to produce it? And, for whom? |
| Production | The process of converting factors of production into product |
| Finite resource | A resource, such as oil, which is scarce and runs out as it is used. The environment is a scarce resource. |
| Opportunity cost | The next best alternative foregone when a choice is made |
| Factors of production | Land, Labour, Capital and Enterprise. |
| Contraction of Demand | Reduced quantity, increased price |
| Extension of Demand | Increased quantity, reduced price |
| Ceteris Paribus | all other things being equal |
| Pareto Efficient | Resources allocated in the most efficient manner |
| Contraction in Supply | Reduced quantity, reduced price |
| Extension of Supply | Increased quanity, increased price |
| Determinants of Supply | Productivity, Indirect taxes, No of Firms, Technology, Subsidy, Weather, Cost of production |
| Tariff | Tax or duty to be paid on a particular class of imports or exports |
| Market | Where buyers meet sellers |
| Equilibrium/ Market clearing price | Where demand meets supply |
| Price Mechanism | Allocate, Rationing, Signal, Incentives |
| Consumer surplus | Price consumers are willing and able to pay subtracted by the price they pay for a good or service |
| Producer surplus | Price producers are willing and able to sell subtracted by the price they sell for a good or service |
Created by:
Haribro
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