IGCSE Economics Flashcards

4788511910	Opportunity cost	A cost of choosing one thing over the next best alternative.	0
4788511911	The economic problem	The idea that resources are scare and wants are unlimited	1
4788511912	Economy	Where people produce goods and services.	2
4788511913	Market	Where a group of people willing to exchange goods and services meet.	3
4788511914	Perfect market	Neither Consumer/producer solely influence the price charged for goods and services	4
4788511915	Imperfect market	a powerful consumer or producer can influence prices	5
4788511916	The four factors of production	Land, Capital, Labour, Enterprise	6
4788511917	Consumer Goods	products bought by consumers to satisfy their wants	7
4788511918	The two types of consumer goods	durable consumer good which can last a long time and a non-durable consumer good which does not last long.	8
4788511919	Capital goods	Man made resources produced by labour which can help in the production of other goods and services.	9
4788511920	Public goods	a good is offered by the government since no private firm would be willing to produce it	10
4788511921	Merit goods	a good/service offered by the government since it feels that people need them regardless whether they can pay for them	11
4788511922	Private wealth	goods and services owned by entrepreneurs and people in the private sector	12
4788511923	Social wealth	goods and services owned by the government in the public sector	13
4788511924	National wealth	both private and social wealth.	14
4788511925	Earned income	money earned while working (wage/salary).	15
4788511926	Unearned income	money generated from assets and wealth (no working required)	16
4788511927	Resource allocation	how much factors of production are used in the production of a particular good/service.	17
4788511928	Economic system	Used to answer a countries three economics questions, what, how, and for whom	18
4788511929	The free market system	both producers and consumers determine what and for whom they produce goods	19
4788511930	The main aim of entrepreneurs	Profit	20
4788511931	The price mechanism	used by entrepreneurs to decide what to produce	21
4788511932	Average product	=total product/units of labour	22
4788511933	Primary Industry	Raw materials are obtained, farming mostly.	23
4788511934	Secondary industry	where materials are processed into goods and services, in factories.	24
4788511935	Tertiary industry	when goods and services are then sold, shops etc.	25
4788511936	Specialization	when a country is good at producing a certain good/service.	26
4788511937	Division of Labour	when a workforce is separated for each to do a specific task in producing a good or service.	27
4788511938	Marginal Product	= Change in total product / change in total labour.	28
4788511939	The law of diminishing returns	adding more units of factors of production give diminishing results to total product.	29
4788511940	Increasing returns	when added factors of production increase total output.	30
4788511941	Fixed costs	costs that do not change as output changes	31
4788511942	Variable cost	costs that increase per increasing output	32
4788511943	Total costs	both fixed and variable costs	33
4788511944	Average costs	total costs/ output	34
4788511945	Total revenue	the price of goods multiplied by the quantity of goods	35
4788511946	Average revenue	total revenue / output.	36
4788511947	Break Even point of production	The point of production when total costs are equal to total revenue	37
4788511948	Depreciation	capital equipment used in a firm wears out and needs to be replaced.	38
4788511949	Optimum point of production	the average cost of producing a good/service is at its lowest level possible	39
4788511950	Increasing returns to Scale	a company doubles its inputs and more than doubles its outputs	40
4788511951	Diminishing returns to Scale	a company doubles its inputs and less than doubles its outputs	41
4788511952	Constant returns to Scale	a company both doubles its inputs and outputs.	42
4788511953	Economies of scale	the average cost of producing a good/service decreases as output increases	43
4788511954	Diseconomies of scale	occur when the average cost of producing a good/service increases from a firm being inefficient.	44
4788511955	Financial Economies of scale:	Allow firms to take huge loans and sell shares on stock exchange.	45
4788511956	Marketing Economies of scale:	Firms can buy items in bulk for discount.	46
4788511957	Technical Economies:	Firms can be specialized, employing specialist workers and machineries.	47
4788511958	Risk-Bearing Economies:	Have many suppliers. Are also diversified, meaning that they produce a large number of products and therefore do not rely on only one	48
4788511959	Entrepreneur	person who combines the factors of production and takes the risk in the company	49
4788511960	The sole trader/proprietor	business owned and run by a single person who bears all profits/responsibility	50
4788511961	Partnerships	partners own the company sharing profit/responsibility	51
4788511962	Cooperatives	owned by workers, share profits and liability equally	52
4788511963	Corporation	owned by shareholder, limited liability	53
4788511964	Multi-national	company that operates in more than one country with headquarters in one country	54
4788511965	The Interest Rate	the Cost of Borrowing Money.	55
4788511966	Venture capital	money lent to small and risky businesses/firms.	56
4788511967	The Stock Market	the market where buyers and sellers trade shares.	57
4788511968	Mortgage	a loan given for buying a property which is to be repaid over a period of 20-30 years.	58
4788511969	Merger	agreement between two firms to join together and form a new enterprise.	59
4788511970	Horizontal Integration	two firms in the same stage of industry join together.	60
4788511971	Vertical integration	firm joins another firm in a previous stage of production	61
4788511972	8 Factors that affect the location of firms	Transport, Favour of a specific location, Cheap land, Near labour supply, near raw materials, near market, near power supply, traditional locations.	62
4788511973	Demand	is the willingness and ability of consumers to buy goods and services.	63
4788511974	Ceteris Parabis	Means all other things being equal and is used to examine determinants in isolation	64
4788511975	Complements	goods that come together, are jointly demanded.	65
4788511976	Substitutes	similar goods where one's change in price affects the others demand oppositely.	66
4788511977	Contraction of demand	refers to the quantity demanded for a product to fall as price rises.	67
4788511978	Extension of demand	refers to an increase in quantity demanded with a fall in price	68
4788511979	Supply	is the amount of goods and services producers are willing to make and sell at a given price.	69
4788511980	Utility	refers to the satisfaction a consumer gains from buying goods and services	70
4788511981	Law of diminishing marginal utility	refers to the fact that the more of a commodity a consumer has, the less utility he/she gets from it.	71
4788511982	Determinants of Supply	Weather, technical progress, changes in costs of factors of production, changes in prices of other commodities	72
4788511983	Excess demand	refers to the quantity demanded being higher than the quantity supplied	73
4788511984	Excess supply	refers to the quantity supplied being higher than the quantity demanded	74
4788511985	Factors of demand	Weather, Changes in people's income, Changes in population, Changes in the prices of other goods, changes in fashion/popularity	75
4788511986	Equilibrium price	The equilibrium price is the market price where the quantity demanded of a good is satisfied with the quantity supplied	76
4788511987	Disequilibrium	(Quantity demanded does not equal Quantity supplied) at a given price level	77
4788511988	Price elasticity of demand	how much a change in price would affect demand.	78
4788511989	Equation for Price elasticity of Demand	Change in quantity demanded/ % Change in price.	79
4788511990	Income elasticity of demand	refers to how much a change in income would affect the quantity demanded.	80
4788511991	YED is bigger than 1	it's a normal good.	81
4788511992	YED is negative	the good is an inferior good	82
4788511993	Cross elasticity of demand	change in the price of one good affects the demand of another good.	83
4788511994	XED is positive	the two goods are substitutes	84
4788511995	XED is negative	the two goods are complements	85
4788511996	Non-price competition	refers to firms creating wants for their products through other methods such as advertising.	86
4788511997	Perfect competition	firms are productively efficient and operate in an allocatively efficient market.	87
4788511998	Characteristics of a perfect competitive market	Homogeneous product (same goods), price takers (cannot influence price b/c competition), perfect information, freedom of entry and exit.	88
4788511999	Advantages of a monopoly	economies of scale, can be efficient and lower prices, better able to afford R&D	89
4788512000	Disadvantages of a monopoly	increased prices, no choice in product, no incentive to innovate	90
4788512001	Product differentiation	products that are similar are produced only with slight differences.	91
4788512002	Normal profit	When profits fall to the point of keeping existing firms in the industry but not high enough to attract new firms in search of high profits.	92
4788512003	Monopoly	has no competition, has abnormal profits, are the price makers, have barriers to entry, there is imperfect information and non-homogeneous products.	93
4788512004	Wage	the price of labour	94
4788512005	Labor market	demand and supply for labour.	95
4788512006	Productivity	the amount of output that is produced from a given input of resources.	96
4788512007	Average product of labour	Total output / Total number of employees.	97
4788512008	Trade union	an organization that represents the worker's interests.	98
4788512009	Wage differentials	the different salaries every person receives based on abilities and qualifications, dirty jobs, satisfaction, lack of information, immobility, and fringe benefits	99