Economies of scale
The cost advantages a firm can gain by increasing the scale of production.
Determination of price
The interaction of the market forces of demand and supply to establish the general level of prices for a good or service.
Production
The total output of goods and services produced by a firm or an industry in a period of time.
Good
A tangible product.
Factors of production
The resources in an economy that can be used to make goods and services.
Opportunity cost
The next best alternative given up when making a choice.
Economic sustainability
The best use of resources in order to create responsible development or growth, now and into the future.
Economic choice
An option for the use of selected scarce resources.
Environmental sustainability
The impact of development or growth where the effect on the environment is small and possible to manage, now and into the future.
Service
An intangible product.
Profit
The amount of money a producer has left after all costs are paid.
Unlimited wants
The infinite desire for something.
Economic problem
How to best use limited resources to satisfy the unlimited wants of people.
Consumer
A person or organisation that directly uses a good or service.
Government
A political authority that decides how a country is run and manages its operation.
Producer
A person, company or country that makes, grows, or supplies goods and/or services.
Scarce resources
When there is an insufficient amount of something to satisfy all wants.
Social sustainability
The impact of development or growth that promotes an improvement of quality of life for all, now and into the future.
Product market
Where final goods and services are offered to consumers, businesses, and the public sector.
Total cost
All the costs of the firm added together.
Average revenue
The revenue per unit sold.
Insurance
A contract, represented by a policy, in which an individual or organisation receives financial protection, or reimbursement against losses, from an insurance company.
Tertiary sector
All activities in an economy that involve the idea of service.
Subsidy
An amount of money a government gives directly to firms to encourage production and consumption.
Inelastic supply
When the percentage change in quantity supplied is less than the percentage change of price.
Average cost
The cost of producing a unit of output.
Labour market
Where workers sell their labour and employers buy the labour.
Savings
The part of an individual's income which is not spent on consumption.
Borrowing
Receiving money (or something of value) in exchange for an obligation to pay it back at a specified time in the future.
Investment
The purchase of capital goods that are used to produce future goods and services. It is also an asset purchased to provide income in the future and/or to be sold for profit.
Primary sector
The direct use of natural resources including extraction of basic materials and goods from land and sea.
Medium of exchange
Anything that sets the standard of value of goods and services acceptable to all parties involved in a transaction.
Exchange
The giving up of something that an individual or firm has in return for something they wish to have, but do not possess.
Net pay
The amount of money that an employee is left with after deductions are made from gross pay.
Money
Anything that is acceptable as a means of payment for goods and services. It is a medium of exchange.
Demand curve
A graph showing how demand for a product varies with changes in its price.
Gross pay
The amount of money that an employee earns before any deductions are made.
Income tax
A tax levied on personal income, tax on a person's wages.
Factor market
Where the services of the factors of production are bought and sold.
Law of demand
The quantity demand varies inversely with the price.
Market forces
The factors that determine price levels and the availability of goods and services in an economy without government intervention.
Pension
A fixed amount paid at regular intervals to a person or their surviving dependents.
Financial sector
Consists of financial organisations and their products and involves the flow of capital.
Building societies
Mutual financial organisations that are owned by their members.
Movement along the demand curve
When the price changes leading to a movement up or down the existing demand curve.
Supply
The ability and willingness of firms to provide goods and services at each price in a given period.
Supply curve
A graph showing how the supply of a product varies with changes in its price.
National insurance
A contribution paid by workers and their employers towards the cost of state benefits.
Market
A way of bringing together buyers and sellers to buy and sell goods and services.
Equilibrium price and quantity
Where the quantity supplied exactly matches the quantity demanded.
Monopoly
A sole producer or seller of a good or service.
Banks
Financial institution licensed to receive deposits and make loans.
Law of supply
The quantity supplied varies directly with price.
Total revenue
The total income of the firm from the sale of its goods and services.
Movement along the supply curve
When the price changes leading to a movement up or down the existing supply curve.
Market economy
An economy in which scarce resources are allocated by the market forces of supply and demand.
Price
The sum of money which has to be paid for a good or service.
Market demand
The total demand for a good or service found by adding together all individual demands.
Allocation of resources
How scarce resources are distributed among producers and how scarce goods and services are allocated among consumers.
Competition
Where different firms are trying to sell a similar product to a consumer.
Individual demand
The demand for a good or service by an individual customer.
Inelastic demand
When the percentage change in quantity demand is less than the percentage change in price.
Price elasticity of supply
The responsiveness of quantity supplied to a change in price of the product.
Secondary sector
All activities in an economy concerned with either manufacturing or construction.
Tax
A compulsory payment to the government.
Loss
When a firm's revenue is less than its costs.
Demand
The willingness and ability to purchase a good or service at the given price in a given time period.
Individual supply
The supply of a good or service by an individual producer.
Elastic demand
When the percentage change in quantity demanded is greater than the percentage change in price.
Oligopoly
Where a small number of firms control the majority of the market.
Shift of the supply curve
A complete movement of the existing supply curve to the right or left.
Productivity
The output per unit of input.
Shift of the demand curve
A complete movement of the existing demand curve either to the right or left.
Elastic supply
When the percentage change in quantity supplied is greater than the percentage change in price.
Market supply
The total supply of a good or service found by adding together all individual producers' supplies.
Specialisation
The process by which individuals, firms, regions and countries concentrate on producing those products that they are best at doing.
Land
The natural resources available for production in an economy.
Labour
The workforce available for production in the economy.
Capital
Man-made aids to production in an economy.
Enterprise
The factor of production that involves taking a risk and organising the other three factors of production.
Economic growth
Increase in GDP over time.
Gross domestic product
The value of output produced within a country in a year.
Employment
When people who are willing and able to work can find a job. (It also refers to the use of labour in a country to produce goods and services.)
Unemployment
When people who are willing and able to work cannot find a job.
Claimant count
A measurement of unemployment using the number of people who claim unemployment-related benefits.
Level of unemployment
The total number of people who are in the workforce and are without a job.
Distribution of income
This describes how income is divided between individuals and households in a country.
Income
A flow of money over time, often as a reward for use of a factor of production.
Wealth
The monetary value of all the assets owned by an individual person, firm or country at a specific time.
Price stability
When the general price level either stays the same or rises at a low rate over time.
Inflation
A sustained increase in the general price level.
Nominal
The value of an economic variable based on current prices.
Real
The value of an economic variable that takes into account changes in the general price level over time.
Consumer price index
A measure of the general price level used to calculate the rate of inflation.
Government revenue
the amount of money the government receives
Government spending
The total amount of money spent by the government in a given time period.
Direct tax
a tax on income and wealth
Indirect tax
A tax on spending which is imposed on the producer but may then be passed on to consumer through an increase in price.
Balanced budget
Is when revenue is equal to government spending
Budget surplus
Is when revenue is greater than government spending