DEFINITIONS

• PPC:

  curve that shows the maximum output of 2 types of product and combinations of those products that can be produced with the existing technology and resources
• Microeconomic:

  the study of the behaviour and decisions of households and firms, and the performance of individual market
• Economic system:

  the institutions, organising and mechanics that influence the economic behaviour and determine how resources are to be allocared
• Planned economic system:

  an economic system where the government makes the crucial decisions, land and capital are privately owned and resources are allocated by directives
• Market economic decision:

  an economic system where consumers determine what is to be produced ,resources are allocated by price mechanism land and capital are privately owned
• PED:

  a measure of the responsiveness of the quantity demanded to a change in price
• PES:

  a measure of the responsiveness of the quantity supplied to a change in price
• Allocative efficiency:

  when resources are allocated to produce the right products int he right amounts
• productive efficiency:

  when are products are produced at the lowest possible cost and making full use of resources
• Dynamic efficiency:


  efficiency occurring over time as a result of investment and innovation
• Social benefits:

  total benefits to a society of a economic activity
• social costs:

  total costs to a society of a economic activity
• Private benefit:

  benefits received by those directly consuming or producing a product
• private costs:

  costs borne by those directly consuming or producing a product
• external costs:

  costs imposed on those who are not involved in consumption and production activities of those directly
• external benefits:


  benefits enjoyed by those who are not involved in consumption and production activities of those directly
• craft union:

  represent workers with particular skills
• General union:

  represents workers with a range of skills
• industrial unions:

  respresents all workers in a particular indusrty
• white collar union:

  represents particular proffesions
• sunk costs:

  costs that can't be recovered if a firm leaves an industry