CSEC Economics flashcards
CSEC Economics · Build recall with a focused review session.
32 cards. Read the term and the definition here. The deck at the top of this page is optional.
- Opportunity cost
- The value of the next best alternative forgone when a choice is made. It exists because resources are scarce and can be used in competing ways.
- Production possibility frontier
- A curve showing the maximum combinations of two goods an economy can produce with all resources fully and efficiently employed, given current technology.
- Scarcity
- The condition where wants are unlimited but the resources available to satisfy them are limited, forcing individuals and societies to make choices.
- Positive statement
- A statement about what is or what will be, based on facts and capable of being tested against evidence. It contains no value judgement.
- Normative statement
- A statement about what ought to be, based on opinion or value judgement. It cannot be proved or disproved by facts alone.
- Ceteris paribus
- A Latin phrase meaning 'all other things being equal'. Economists use it to isolate the effect of one variable while holding all others constant.
- Factors of production
- The resources used to produce goods and services: land, labour, capital and enterprise. Each earns a reward: rent, wages, interest and profit respectively.
- Law of demand
- The principle that, ceteris paribus, as the price of a good rises the quantity demanded falls, and as price falls quantity demanded rises.
- Demand curve shift
- A movement of the entire demand curve caused by a non-price factor such as income, tastes, population or the price of a related good.
- Substitute goods
- Goods that can replace each other in use. A rise in the price of one increases demand for the other, shifting its demand curve rightward.
- Complementary goods
- Goods consumed together, such as bread and butter. A rise in the price of one reduces demand for the other.
- Equilibrium price
- The price at which quantity demanded equals quantity supplied. At this price there is no shortage or surplus and the market clears.
- Excess demand
- A situation where quantity demanded exceeds quantity supplied at a price below equilibrium, creating a shortage that tends to push price upward.
- Excess supply
- A situation where quantity supplied exceeds quantity demanded at a price above equilibrium, creating a surplus that tends to push price downward.
- Price elasticity of demand
- The responsiveness of quantity demanded to a change in price, calculated as percentage change in quantity demanded divided by percentage change in price.
- Elastic demand
- Demand where the percentage change in quantity exceeds the percentage change in price (PED greater than 1). A price cut raises total revenue.
- Inelastic demand
- Demand where the percentage change in quantity is smaller than the percentage change in price (PED less than 1). A price rise raises total revenue.
- Price elasticity of supply
- The responsiveness of quantity supplied to a change in price. Supply is more elastic in the long run and when firms hold spare capacity.
- Price ceiling
- A maximum legal price set below equilibrium to protect consumers. It creates excess demand, shortages and possibly black markets.
- Price floor
- A minimum legal price set above equilibrium, often to protect producers or workers. It creates excess supply or surplus.
- Indirect tax incidence
- The division of an indirect tax burden between consumers and producers. With inelastic demand, consumers bear the larger share.
- Subsidy
- A government payment to producers that lowers production costs, shifts supply rightward, lowers price and increases quantity traded.
- Perfect competition
- A market structure with many buyers and sellers, a homogeneous product, free entry and exit, and perfect information. Firms are price takers.
- Monopoly
- A market with a single seller, no close substitutes, high barriers to entry and significant price-setting power. Output tends to be lower and price higher.
- Oligopoly
- A market dominated by a few large firms whose decisions are interdependent. Firms may compete on price or collude, and non-price competition is common.
- Circular flow of income
- A model showing money moving between households and firms through factor and product markets, with leakages and injections altering the level of national income.
- Gross domestic product
- The total market value of all final goods and services produced within a country's borders in a given period, usually one year.
- Inflation
- A sustained increase in the general price level of an economy, measured by changes in a consumer price index over time.
- Fiscal policy
- The use of government taxation and spending to influence aggregate demand, employment, inflation and economic growth.
- Monetary policy
- The use of interest rates, money supply and credit controls by a central bank to influence inflation, output and employment.
- Balance of payments
- A record of all economic transactions between residents of a country and the rest of the world, comprising current, capital and financial accounts.
- Economic development
- Improvement in living standards beyond income growth, including better health, education, income distribution and reduced poverty.