1.

mixed economies - resources are partly allocated by the

price mechanism / market and partly by the government
2.

free market economy (e.g. resources are allocated by the price

mechanism / demand & supply)
3.

market failure (e.g. price mechanism leads to a net welfare

loss / market fails to allocate resources efficiently)

4.

production possibility frontier (e.g. the maximum output combinations

of two goods an economy can achieve when all its resources are fully
and efficiently employed)

5.

opportunity cost (e.g. value of the next best alternative foregone)

6.

price elasticity of demand (e.g. responsiveness of demand for a good

due to a change in its price or %QD %P)

7.

normal good (e.g. as real income increases, so will demand increase

8.

derived demand its demand is derived from the demand for the
product it makes

9.

external benefits (e.g. positive third party effects / positive spillover

effects / benefits from a transaction which the price mechanism
ignores / difference between social benefits and private benefits)
10.

subsidy (Government grant to firms to increase

production / reduce price of a good)

11.

minimum price scheme (a floor price / minimum price below which

price cannot fall) - (e.g. stabilise prices or increase producer income)

12.

cross elasticity of demand or formula (e.g. responsiveness in demand

for one good due to a change in price of another good or %QD good
B %P good A)

13.

geographical mobility / immobility of labour (e.g. the ability / inability

of labour to move from one location to another in taking work)

14.

VAT (a tax placed on the expenditure / a tax set as a percentage of

the price of a good) or indirect tax
15.

Complementary goods have a negative cross elasticity of

demand.

16.

tradable pollution permits, e.g. an allowance on the amount of

pollution firms may emit which can be bought and sold in the
market.

17.

free rider problem (difficulty in charging people for consuming a good

once it is provided)

18.

public goods (non-excludable and non-rivalry)

19.

positive statement is required (one that is based on fact / it can be

tested as true or false / a scientific approach to economics / objective
statement)

20.

normative statement (one that is based on value judgement / it

cannot be tested as true or false / a non-scientific approach to
economics / subjective statement)

21.

specific tax (a fixed charge imposed per a unit of good / a tax placed
on the expenditure on a good / a compulsory levy on suppliers)

22.

(price times quantity demanded or the total revenue received from

selling a given quantity of output)

23.

Demand is income elastic or a normal good

24.

inferior goods negative income elasticity

25.

substitutes / competitive demand , complement / joint demand

26.

type of market failure e.g. imperfect market knowledge or asymmetric

information

27.

affordability (ratio of house prices to earnings / income)

28.

producer surplus (the difference between the price a firm is willing to

sell a good for and the actual market price

29.

price elasticity of demand (PED): (the responsiveness or sensitivity of

demand for a good due to a change in its price)
30.

buffer stock scheme (for example: agency sells from buffer

stock in times of poor harvest and buys or adds to it in times of
good harvest

31.

welfare gain (the excess of social benefit over social cost for a given
quantity)

32.

price mechanism (the interaction of supply and demand to allocate

resources)

33.

equilibrium price (a price where the quantity demand equals the

quantity supply)

34.

imperfect market information (people lack knowledge to make

informed choices)

35.

pension (e.g. contributions that workers make from their income

which they can use on retirement)

36.

economic growth (an increase in real GDP / an increase

in the productive potential for an economy / increase in
productive capacity / an outward shift in the PPF curve).

37.

price elasticity of supply (the responsiveness of supply

due to a change in price of a good, or, %QS %P).

38.

sustainable resource in terms of something that is being

used or consumed or produced / at a rate that will
ensure it is available for future generations / it may not
run out it is renewable.

39.

external costs: cost external to an exchange / negative

third party effect / spillover from production / cost which

the price mechanism fails to take into account or is
outside the market transaction / social cost minus
private cost.
40.

Occupational mobility refers to the ability of labour

to move from one occupation to another

41.

specialisation or division of labour (labour allocate all their

time in producing just one good or service)

42.

welfare loss (the excess of social cost over social benefit for a
given output)

43.

Indirecttaxfixedchargeimposedontheexpenditureofagood

44.

resources (for example, labour, land, capital and

enterprise used in production of goods and services)

45.

scarcity (resources are limited or finite in supply and so

cannot meet all human wants)

46.