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the minimum which is necessary for a person to survive as a human being


desires for the consumption of goods and services


the physical land and minerals associated with it, such as oil and diamonds


the number of people willing and able to work and the skills that they have


the quantity of capital equipment in an economy, such as machinery and transport


the ability of managers to think of new ideas, to manage people and to take risks

The law of demand

as price increases, demand decreases and vice versa

Effective demand

Want it and is willing / able to buy

Latent demand

Want it but is not able to buy

Normal Goods

demand increases as consumer income rises

Inferior Goods

demand decreases as the level of income increases

Substitute Goods

different goods that satisfy the same needs of the consumers and can be used to replace one another

Compliments Goods

goods that go well with each other

Price Elasticity of Demand

The responsiveness of demand to a change in price

Elastic Demand

A change in price results in a greater change in demand

Inelastic Demand

A change in price results in a proportionately smaller change in demand

Indirect tax

a tax imposed on goods and services rather than on income or profits

Direct tax

a tax imposed on the income or profits of the person who pays, it rather than on goods and services

Government subsidies

amount of money given to an industry / a group of businesses to support them

Private sector

the provision of goods and services by businesses that are owned by individuals or groups of individuals

Public sector

government organizations that provide goods and services in the economy

Market failure

where markets lead to inefficiency

Mixed economy

mixed economy where goods and services are provided by both the private and the public sectors

Merit goods

goods which are under-provided by the private sector

Public goods

goods that are not likely to be provided by the private sector


the exclusive possession or control of the supply or trade in a commodity or service - when there is no competition and only one company is providing the good / service

Division of labour

the breaking down of the production process into small parts with each worker allocated to a specific task


the production of a limited range of goods by individuals, firms, regions or countries

Working population

those people who are in work or seeking work

Derived demand

demand that arises because there is demand for another good

Minimum wage

a minimum amount per hour which most workers are entitled to be paid

Trade unions

organisations that exist to protect the interests of workers.

Human Capital

The value of an individual worker to a business

Fixed Capital

refers to the factories, offices, shops, machines, tools, equipment and furniture used in the production

Working Capital

stocks of raw materials and components that will be used up in the production

Capital Intensive

where production relies more heavily on machinery relative to labour

Labour Intensive

where production relies more heavily on labour relative to machinery


the amount of output that can be produced with a given quantity of resources


an individual who organizes the other factors of production and risks their own money in a business venture


a process which involves converting resources into goods or services

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