AQA Economics Micro Key Terms

• Capital Goods


  Goods/materials that are used for the production of other items. Not consumed in their own right.
• Consumer Goods


  Goods that are wanted because they provide satisfaction to their owner.
• Consumers


  Somebody who purchases goods and services.
• Consumption


  Using up goods/services.
• Entrepreneurs


  Individuals that set up a business and take risks
• Goods


  Items produced by the factors of production (usually for economic gain).
• Markets


  Place where goods & services are exchanged - (may be visible or invisible).
• Needs


  Requirements for continued existence (food, clean water, shelter)
• Producers


  Person or company that produces goods or services for sale.
• Services


  Something that fulfils a need, often not a physical object (banking, teachers, policemen).
• SME


  Small to Medium sized Enterprises
• Wants


  The desires that people have that are not necessary for their existence/ luxuries.
• Capital


  Man made goods used in the production process.
• Enterprise


  The person organising factors of production in the production process, who takes risks & decision making in business
• Factors of Production (FOP)


  Inputs that are in the production process to produce output of finished goods and services; Land, labour, capital, enterprise.
• Finite


  Having an end or a limit
• Labour


  The human effort (mental & physical) required to produce something.
• Land


  The land we use/build on & resources that are contained in the land and water.
• Basic Economic Problem


  The economic problem –sometimes called basic or central economic problem – asserts that an economy's finite resources are insufficient to satisfy all human wants and needs.
• Opportunity Cost


  The cost of the next best alternative.
• Resources


  Items that are needed/ useful for consumption or the production of other items.
• Scarcity


  Limited availability of resources (ones that will run out eventually), not enough to satisfy all the wants.
• Utility


  The benefit gained from consuming a product.
• Factor Markets


  The buying and selling of land, labour and capital.
• Product Markets


  A market in which products are bought and sold and prices are determined by the interaction of demand and supply.
• Primary Sector


  Industries involved in extracting raw materials (agriculture, fishing, forestry, mining).
• Secondary Sector


  Manufacturing or construction industries. Ones that make things (factories, carpenters, bakers, builders).
• Tertiary Sector


  Industries that provide a service (banking, solicitors, teachers, police forces, doctors).
• Division of Labour


  The allocation of workers to specific tasks in the production line.
• Exchange


  Where buyers and sellers come together in a market place to negotiate prices.
• Job Rotation


  Where employee move between departments
• Specialisation


  Where a country, business or worker focuses on the production of a limited range of products or services in order to gain greater efficiency; with the aim of increasing productivity & lowering costs.
• Contraction in Demand


  Movement along the demand curve to the left (higher price & lower quantity demanded).
• Demand


  A consumer's desire, willingness and ability to pay a price for a specific good or service.
• Demand Curve


  Graph that shows the different quantity of a product demanded at different price levels.
• Disposable Income


  The money available after paying taxes that you can choose how to use.
• Effective Demand


  The financial ability to actually purchase the product.
• Indirect Taxes


  Taxation on spending (VAT, excise duties, import taxes)
• Individual Demand


  The amount a single person would be willing to buy at a range of prices.
• Infrastructure


  Basic systems government's need to make economic activity possible, e.g. transport and communications