1.Scarcity: a situation where there is not enough to satisfy everyone’s wants.
2.The economic problem: unlimited wants exceed scarce resources.
3.Factors of production: the economic resources of capital, enterprise, labour and land.
4.Land: gifts of nature available for production.
5.Labour: all human effort mental and physical involved in producing goods and services.
6.Enterprise: risk bearing and decision making in business.
7.Occupationally mobile: capable of changing use.
8.Geographically immobile: incapable of moving from one location to another location.
9.Capital: humanmade goods used in production.
10.Investment: spending on capital goods.
11.Depreciation: the value of replacing capital.
12.Productivity: output per worker hour.
13.Opportunity cost: the next best alternative for gone.
14.Economic good: a product which requires resources to produce it and therefore has an opportunity cost.
15.Free good: a product which does not require resources to produce it and therefore has an opportunity cost.
16.Production possibility curve: a curve that shows the maximum output of two types of products and combination of those products that can be produced with existing resources and technology.
17.A planned economy: an economy where the government makes the crucial decisions, land and capital are state-owned and resources are allocated by directives.
18.A market economy: an economy where consumers determine what is produced, resources are allocated by the price mechanism and land and capital are privately owned.
19.A mixed economy: an economy in which both the private and public sectors play an important role.
1.Demand: the willingness and ability to buy a product.
2.Market demand: total demand for a product.
3.An extension indemand: a rise in the quantity demanded caused by a fall in the price of the product itself.
4.A contraction indemand: a fall in the quantity demanded caused by a rise in the price of the product itself.
5.Supply: the willingness and ability to sell a product.
6.Market supply: total supply of the product.
7.An extension insupply: a rise in the quantity supplied caused by a rise in the price of the product itself.
8.A contraction insupply: a fall in the quantity supplied caused by a fall in the price of the product itself.
9.Equilibrium price: the price where demand and supply are equal.
10.Disequilibrium: a situation where demand and supplyare not equal.
11.Changes in demand: shifts in the demand curve.
12.An increase in demand: a rise in demand at any given price, causing the demand curve to shift to the right.
13.A decrease in demand: a fall in demand at any given price, causing the demand curve to shift to the left.
14.Disposable income: Income after income tax and national insurance contributions have been deducted.
15.Normal good: a product whose demand increases when income increases and decreases when income falls.
16.Inferior good: a product whose demand decreases when income increases and increases when income falls.
17.Substitute: a product that can be used in place of another.
18.Compliment: a product that is used in conjunction with another product.
19.Ageing population: an increase in the average age of the population.
20.Birth rate: the number of life birth per thousand of the population in a year.
21.An increase in supply: a rise in supply at any given price, causing the supply curve to shift to the right.
22.A decrease in supply: a fall in supply at any given price causing the supply curve to shift to the left.
23.Changes in supply: changes in supply conditions causing shifts in the supply curve.
24.Unit cost: the average cost of production. It is found by dividing total cost by output.
25.Improvements in technology: advances in the quality of capital goods and methods of production.
26.A tax: a payment to the government.
27.Indirect taxes: taxes on goods and services.
28.A subsidy: a payment by a government to encourage the production or consumption of a product.
29.Price elasticity of demand: a measure of the responsiveness of demand to a change in price.
30.Private costs: costs borne by those directly consuming or producing a product.
31.Private benefits: benefits received by those directly consuming or producing a product.
32.External costs: costs imposed on those who are not involved in the consumption and production activities of others directly.
33.External benefits: benefits enjoyed by those whoare not involved in the consumption and production activities of others directly.
34.Social costs: the total costs to a society of an economic activity.
35.Social benefits: the total benefits to a society of an economic activity.
36.Cost benefits analysis: a method of assessing investment projects which takes into account, social costs and benefits