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40 terms

Economics Glossary

STUDY
PLAY
Needs
the minimum which is necessary for a person to survive as a human being
Wants
desires for the consumption of goods and services
Land
the physical land and minerals associated with it, such as oil and diamonds
Labour
the number of people willing and able to work and the skills that they have
Capital
the quantity of capital equipment in an economy, such as machinery and transport
Entrepreneurship
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
Monopolies
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
Specialisation
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
Productivity
the amount of output that can be produced with a given quantity of resources
Entrepreneur
an individual who organizes the other factors of production and risks their own money in a business venture
Production
a process which involves converting resources into goods or services