Economic Revison Unit 1
Equilibrium Price:
The price at which quantity demanded and quantity supplied are equal.
(or use labelled supply and demand diagram)
Market Failure:
When a market results in a misallocation of resources
(or labelled marginal cost and benefit diagram)
Social Cost:
The whole cost resulting from any decision or choice, for example by a firm or a consumer
Normal Good:
A good for which demand increases as income increases
A good with a positive income elasticity of demand
Income elasticity of demand:
Income elasticity of demand= % Change in Quantity demanded % Change in income
Subsidy:
A payment that reduces the cost or price of a good or service often from the government
Economies of scale:
Falling average costs as the size or output of a firm increases.
Positive Externality:
Benefits received by a third party; beneficial spin-off effects; social benefit greater than private benefit.
Demerit Good:
A good for which the long term private costs of production exceed the short-term private costs of consumption.
Negative Externality:
An adverse consequence of a economic activity that is experienced by third parties; an adverse spin-off effect resulting from an economic activate; when the social costs of activity exceeds private costs of activity.
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Aggregate Demand:
Total planned expenditure in the economy.
Allocative Efficiency:
This is achieved when you cannot make someone better off without making someone else worse off; connote produce more of one thing without producing less of another (like at equilibrium)
Budget Deficit:
Where government spending exceeds government recipes in a financial year
Budget Surplus:
Where government recipes exceeds government spending in a financial year
Buffer Stock: an intervention system that aims to limits the
The price at which quantity demanded and quantity supplied are equal.
(or use labelled supply and demand diagram)
Market Failure:
When a market results in a misallocation of resources
(or labelled marginal cost and benefit diagram)
Social Cost:
The whole cost resulting from any decision or choice, for example by a firm or a consumer
Normal Good:
A good for which demand increases as income increases
A good with a positive income elasticity of demand
Income elasticity of demand:
Income elasticity of demand= % Change in Quantity demanded % Change in income
Subsidy:
A payment that reduces the cost or price of a good or service often from the government
Economies of scale:
Falling average costs as the size or output of a firm increases.
Positive Externality:
Benefits received by a third party; beneficial spin-off effects; social benefit greater than private benefit.
Demerit Good:
A good for which the long term private costs of production exceed the short-term private costs of consumption.
Negative Externality:
An adverse consequence of a economic activity that is experienced by third parties; an adverse spin-off effect resulting from an economic activate; when the social costs of activity exceeds private costs of activity.
====================================================================================================
Aggregate Demand:
Total planned expenditure in the economy.
Allocative Efficiency:
This is achieved when you cannot make someone better off without making someone else worse off; connote produce more of one thing without producing less of another (like at equilibrium)
Budget Deficit:
Where government spending exceeds government recipes in a financial year
Budget Surplus:
Where government recipes exceeds government spending in a financial year
Buffer Stock: an intervention system that aims to limits the