key words

• Government


  A political authority that decides how a country is run and manages its operation
• Consumer


  A person or organisation that directly uses a good or service
• Producer


  An individual, company or country that makes, grows or supplies goods and/or services
• Interdependence


  Each economic group responds to the actions of others
• Good


  A tangible product, i.e. a product that can be seen or touched
• Service


  An intangible product, i.e. a product that cannot be seen or touched
• Factors of production


  • Land
  • Labour
  • Capital
  • Enterprise
• Production


  The total output of goods and services produced by a firm or industry in a time period
• Land


  Natural resources, such as farmland and mineral deposits
• Labour


  The workforce of an economy in terms of both the physical and mental effort involved in production
• Capital


  The human made aids to production
• Enterprise


  The individual that takes a risk in organising the other three factors of production
• Allocation of resources


  How scarce resources are distributed among producers and how scarce good are allocated among consumers
• Average cost (AC)


  Total costs divided by total output. Unit cost of production
• Average revenue


  Total revenue divided by total output. Revenue per unit sold
• Borrowing


  To receive money from another party with the agreement that the money will be repaid
• Building societies


  A mutual financial institution owned by its members. Its primary objectives are to receive deposits from its members and to lend money to members to purchase property
• Central bank


  The institution responsible for issuing a country's banknotes, acting as a lender of last resort for other banks, and implementing monetary policy (e.g. setting interest rates)
• Commercial (retail) bank


  Take deposits from customers individuals and firms and turn them into assets for the bank
• Competition


  Where different firms in a market are trying to sell similar products to consumers
• Demand


  The willingness and ability to purchase a good or service at a given price over a given time period
• Demand for labour


  Derived demand- demand for labour due to demand for the good or service the labour produces e.g. demand for construction workers when there is a demand for building work
• Determination of price


  The interaction of the free market forces of demand and supply to establish the general level of price for a good/service
• Determination of wages


  Interaction of supply of labour and demand for labour
• Division of labour


  Where workers concentrate on one area of the production process
• Economic choice


  An option for the use of scarce resources
• Economic problem


  How best to use scarce resources in order to satisfy unlimited wants of people
• Economic sustainability


  The best use of scarce resources to promote development or growth for a country, firm or individual, now and in the future
• Economies of scale


  The cost advantages a firm can gain by increasing the scale of production, leading to a fall in long run average costs
• Efficiency


  The optimal production and distribution of scarce resources
• Elastic demand


  When the percentage change in quantity demanded is greater than the percentage change in price
• Elastic supply


  When the percentage change in quantity supplied is greater than the percentage change in price
• Environmental sustainability


  When the impact of growth or development on the natural world is small and manageable now and in the future
• Equilibrium price and quantity

  Where the quantity supplied exactly matches the quantity demanded
• Exchange


  Giving up something you have in return for something you do not have, but wish to have
• Factor market


  Where the services of the factors of production are sold
• Financial sector


  Firms that provide financial services
• Gross pay


  Earnings before any deductions are taken
• Income tax


  A direct tax levied on income
• Individual demand


  The demand for a good/service by an individual consumer