Glossary+of+terms+IGCSE

A

Average cost The average cost of production per unit. It is calculated by dividing the total cost by the quantity produced. It is equal to the total variable cost + the total fixed cost.

Average fixed cost The average fixed cost of production per unit. It is calculated by dividing the total fixed cost by the quantity produced. It falls as quantity produced rises.

B

Barriers to entry Factors which make it difficult or impossible for a firm to enter a particular market and compete with existing firms.

C

Capital One of the factors of production. It includes all buildings and machinery.

Cartels A group of producers that attempt to increase the price of their good by limiting output or agreeing upon a price to sell their goods at.

Choices Economic choices have to be made regarding the use of scare economic resources

Collective bargaining <span style="font-family: 'Trebuchet MS',Helvetica,sans-serif; font-size: 16px;">Bargaining between a group of managers and a union for the purpose of agreeing upon new conditions/ contracts etc. for the staff.

<span style="font-family: 'Trebuchet MS',Helvetica,sans-serif; font-size: 16px;">Command economy <span style="font-family: 'Trebuchet MS',Helvetica,sans-serif; font-size: 16px;">An economic system where the government controls all of the factors of production.

<span style="font-family: 'Trebuchet MS',Helvetica,sans-serif; font-size: 16px;">Complementary goods <span style="font-family: 'Trebuchet MS',Helvetica,sans-serif; font-size: 16px;">A good which is usually purchased with another (e.g., bread and butter).

<span style="font-family: 'Trebuchet MS',Helvetica,sans-serif; font-size: 16px;">Composite demand <span style="font-family: 'Trebuchet MS',Helvetica,sans-serif; font-size: 16px;">A good that is demanded for two or more distinct choices (e.g., oil is used for petrol and the production of chemicals).

<span style="font-family: 'Trebuchet MS',Helvetica,sans-serif; font-size: 16px;">D

<span style="font-family: 'Trebuchet MS',Helvetica,sans-serif; font-size: 16px;">Demerit good <span style="font-family: 'Trebuchet MS',Helvetica,sans-serif; font-size: 16px;">A good that is deemed to be socially unacceptable and is over provided by the market mechanism (e.g., cigarettes) Social cost is greater than private cost.

<span style="font-family: 'Trebuchet MS',Helvetica,sans-serif; font-size: 16px;">Demand: <span style="font-family: 'Trebuchet MS',Helvetica,sans-serif; font-size: 16px;">A willingness and ability to purchase a good / service at a given price over a given period of time

<span style="font-family: 'Trebuchet MS',Helvetica,sans-serif; font-size: 16px;">Diseconomies of scale <span style="font-family: 'Trebuchet MS',Helvetica,sans-serif; font-size: 16px;">A rise in the longrun average costs as production rises.

<span style="font-family: 'Trebuchet MS',Helvetica,sans-serif; font-size: 16px;">E

<span style="font-family: 'Trebuchet MS',Helvetica,sans-serif; font-size: 16px;">Economic problem <span style="font-family: 'Trebuchet MS',Helvetica,sans-serif; font-size: 16px;">Resources are scarce, however wants are infinite.

<span style="font-family: 'Trebuchet MS',Helvetica,sans-serif; font-size: 16px;">Economic resources <span style="font-family: 'Trebuchet MS',Helvetica,sans-serif; font-size: 16px;">These are the inputs necessary for production to take place; land, labour, capital and enterprise (entrepreneurial activity).

<span style="font-family: 'Trebuchet MS',Helvetica,sans-serif; font-size: 16px;">Economies of scale <span style="font-family: 'Trebuchet MS',Helvetica,sans-serif; font-size: 16px;">A fall in the longrun average costs as production rises.

<span style="font-family: 'Trebuchet MS',Helvetica,sans-serif; font-size: 16px;">Enterprise <span style="font-family: 'Trebuchet MS',Helvetica,sans-serif; font-size: 16px;">One of the factors of production that is carried out by an entrepreneur.

<span style="font-family: 'Trebuchet MS',Helvetica,sans-serif; font-size: 16px;">Entrepreneur <span style="font-family: 'Trebuchet MS',Helvetica,sans-serif; font-size: 16px;">Is the person who thinks of a business idea, raises the capital and then organises the other three factor of production.

<span style="font-family: 'Trebuchet MS',Helvetica,sans-serif; font-size: 16px;">Equilibrium <span style="font-family: 'Trebuchet MS',Helvetica,sans-serif; font-size: 16px;">A situation of rest where there is no desire to move from the current position.

<span style="font-family: 'Trebuchet MS',Helvetica,sans-serif; font-size: 16px;">Equilibrium price and quantity <span style="font-family: 'Trebuchet MS',Helvetica,sans-serif; font-size: 16px;">The price and quantity at which there is no tendency to change as demand is equal to supply.

<span style="font-family: 'Trebuchet MS',Helvetica,sans-serif; font-size: 16px;">F

<span style="font-family: 'Trebuchet MS',Helvetica,sans-serif; font-size: 16px;">Factors of production <span style="font-family: 'Trebuchet MS',Helvetica,sans-serif; font-size: 16px;">These are the inputs necessary for production to take place; land, labour, capital and enterprise (entrepreneurial activity).

<span style="font-family: 'Trebuchet MS',Helvetica,sans-serif; font-size: 16px;">Financial economies of scale <span style="font-family: 'Trebuchet MS',Helvetica,sans-serif; font-size: 16px;">Large firms are able to borrow money cheaper than small ones, as they are more likely to be able to repay the loan (less chance of bankruptcy).

<span style="font-family: 'Trebuchet MS',Helvetica,sans-serif; font-size: 16px;">G <span style="font-family: 'Trebuchet MS',Helvetica,sans-serif; font-size: 16px;">H <span style="font-family: 'Trebuchet MS',Helvetica,sans-serif; font-size: 16px;">I

<span style="font-family: 'Trebuchet MS',Helvetica,sans-serif; font-size: 16px;">Indirect tax <span style="font-family: 'Trebuchet MS',Helvetica,sans-serif; font-size: 16px;">Is a tax levied on goods or services (e.g., VAT or excise duties).

<span style="font-family: 'Trebuchet MS',Helvetica,sans-serif; font-size: 16px;">J <span style="font-family: 'Trebuchet MS',Helvetica,sans-serif; font-size: 16px;">K <span style="font-family: 'Trebuchet MS',Helvetica,sans-serif; font-size: 16px;">L

<span style="font-family: 'Trebuchet MS',Helvetica,sans-serif; font-size: 16px;">Labour <span style="font-family: 'Trebuchet MS',Helvetica,sans-serif; font-size: 16px;">One of the factors of production, it is the workforce.

<span style="font-family: 'Trebuchet MS',Helvetica,sans-serif; font-size: 16px;">Land <span style="font-family: 'Trebuchet MS',Helvetica,sans-serif; font-size: 16px;">One of the factors of production, it includes all raw materials as well as the land.

<span style="font-family: 'Trebuchet MS',Helvetica,sans-serif; font-size: 16px;">M

<span style="font-family: 'Trebuchet MS',Helvetica,sans-serif; font-size: 16px;">Market <span style="font-family: 'Trebuchet MS',Helvetica,sans-serif; font-size: 16px;">Anywhere that buyers and sellers are able to communicate and exchange goods and services (e.g., shop, mail order and telephone). a market exists where there are buyers and sellers ie where there is supply and demand

<span style="font-family: 'Trebuchet MS',Helvetica,sans-serif; font-size: 16px;">Market economy <span style="font-family: 'Trebuchet MS',Helvetica,sans-serif; font-size: 16px;">An economic system which aims to resolve the basic economic problem via the workings of the market mechanism (prices are set through the interactions of buyers and sellers).

<span style="font-family: 'Trebuchet MS',Helvetica,sans-serif; font-size: 16px;">Market failure <span style="font-family: 'Trebuchet MS',Helvetica,sans-serif; font-size: 16px;">Where resources are allocated inefficiently.

<span style="font-family: 'Trebuchet MS',Helvetica,sans-serif; font-size: 16px;">Marketing economies <span style="font-family: 'Trebuchet MS',Helvetica,sans-serif; font-size: 16px;">As output grows advertising per pound of sales will be reduced.

<span style="font-family: 'Trebuchet MS',Helvetica,sans-serif; font-size: 16px;">Merit goods <span style="font-family: 'Trebuchet MS',Helvetica,sans-serif; font-size: 16px;">A good that is deemed to be socially acceptable and is under provided by the market mechanism (e.g., health and education)

<span style="font-family: 'Trebuchet MS',Helvetica,sans-serif; font-size: 16px;">Mixed economy <span style="font-family: 'Trebuchet MS',Helvetica,sans-serif; font-size: 16px;">An economy where both the free market mechanism and the government planning process allocate resources (e.g., UK)

<span style="font-family: 'Trebuchet MS',Helvetica,sans-serif; font-size: 16px;">N

<span style="font-family: 'Trebuchet MS',Helvetica,sans-serif; font-size: 16px;">Needs <span style="font-family: 'Trebuchet MS',Helvetica,sans-serif; font-size: 16px;">The minimum item that a person needs for survival

<span style="font-family: 'Trebuchet MS',Helvetica,sans-serif; font-size: 16px;">O

<span style="font-family: 'Trebuchet MS',Helvetica,sans-serif; font-size: 16px;">Opportunity cost <span style="font-family: 'Trebuchet MS',Helvetica,sans-serif; font-size: 16px;">The benefits foregone of the next best alternative that is given up.

<span style="font-family: 'Trebuchet MS',Helvetica,sans-serif; font-size: 16px;">P

<span style="font-family: 'Trebuchet MS',Helvetica,sans-serif; font-size: 16px;">Perfect competition <span style="font-family: 'Trebuchet MS',Helvetica,sans-serif; font-size: 16px;">A market structure where there are many buyers and sellers, where there is freedom of entry and exit, where there is perfect knowledge and where all firms produce a homogeneous product. Because there is so much competition firms cannot determine the price but must accept the market price.

<span style="font-family: 'Trebuchet MS',Helvetica,sans-serif; font-size: 16px;">Planned economy <span style="font-family: 'Trebuchet MS',Helvetica,sans-serif; font-size: 16px;">An economic system where the government controls all of the factors of production.

<span style="font-family: 'Trebuchet MS',Helvetica,sans-serif; font-size: 16px;">Price elasticity of demand <span style="font-family: 'Trebuchet MS',Helvetica,sans-serif; font-size: 16px;">Shows how the quantity demanded will change in response to a change in price.

<span style="font-family: 'Trebuchet MS',Helvetica,sans-serif; font-size: 16px;">Privatisation <span style="font-family: 'Trebuchet MS',Helvetica,sans-serif; font-size: 16px;">The sale of government owned (nationalised) industries to the private sector

<span style="font-family: 'Trebuchet MS',Helvetica,sans-serif; font-size: 16px;">Q <span style="font-family: 'Trebuchet MS',Helvetica,sans-serif; font-size: 16px;">R

<span style="font-family: 'Trebuchet MS',Helvetica,sans-serif; font-size: 16px;">Residual Unemployment <span style="font-family: 'Trebuchet MS',Helvetica,sans-serif; font-size: 16px;">Unemployment that occurs during times of full employment, amde up of people unwilling to work.

<span style="font-family: 'Trebuchet MS',Helvetica,sans-serif; font-size: 16px;">S

<span style="font-family: 'Trebuchet MS',Helvetica,sans-serif; font-size: 16px;">Services <span style="font-family: 'Trebuchet MS',Helvetica,sans-serif; font-size: 16px;">Things that are purchased by consumers that do not have physical characteristics

<span style="font-family: 'Trebuchet MS',Helvetica,sans-serif; font-size: 16px;">Subsidy <span style="font-family: 'Trebuchet MS',Helvetica,sans-serif; font-size: 16px;">This is money given to firms which lowers the price of a good.

<span style="font-family: 'Trebuchet MS',Helvetica,sans-serif; font-size: 16px;">Supply <span style="font-family: 'Trebuchet MS',Helvetica,sans-serif; font-size: 16px;">The quantity of goods that suppliers are willing to sell at any given price over a specified period of time.

<span style="font-family: 'Trebuchet MS',Helvetica,sans-serif; font-size: 16px;">T

<span style="font-family: 'Trebuchet MS',Helvetica,sans-serif; font-size: 16px;">Technical economies <span style="font-family: 'Trebuchet MS',Helvetica,sans-serif; font-size: 16px;">Arise because larger factories can be productively more efficient or purchase large expensive pieces of equipment.

<span style="font-family: 'Trebuchet MS',Helvetica,sans-serif; font-size: 16px;">Total revenue <span style="font-family: 'Trebuchet MS',Helvetica,sans-serif; font-size: 16px;">The total amount received from the sales of a product. PxQ

<span style="font-family: 'Trebuchet MS',Helvetica,sans-serif; font-size: 16px;">U

<span style="font-family: 'Trebuchet MS',Helvetica,sans-serif; font-size: 16px;">Trade unions <span style="font-family: 'Trebuchet MS',Helvetica,sans-serif; font-size: 16px;">Organisations of workers that seek to improve the welfare of the workforce.

<span style="font-family: 'Trebuchet MS',Helvetica,sans-serif; font-size: 16px;">V

<span style="font-family: 'Trebuchet MS',Helvetica,sans-serif; font-size: 16px;">Variable costs <span style="font-family: 'Trebuchet MS',Helvetica,sans-serif; font-size: 16px;">Costs that vary directly with the level of output (e.g., raw materials).

<span style="font-family: 'Trebuchet MS',Helvetica,sans-serif; font-size: 16px;">W <span style="font-family: 'Trebuchet MS',Helvetica,sans-serif; font-size: 16px;">X <span style="font-family: 'Trebuchet MS',Helvetica,sans-serif; font-size: 16px;">Y <span style="font-family: 'Trebuchet MS',Helvetica,sans-serif; font-size: 16px;">Z