econ def

• Average revenue


  Average income from the sales of each individual good (total revenue/quantity)
• Barriers to entry


  Circumstances that could prevent a firm from successfully joining a market (selling a particular good or service)
• Base rate


  The interest rate set by the bank of England that influences market interest rates
• Budget deficit


  When government spending is greater than tax revenue (spending > tax)
• Budget surplus


  When government tax revenue exceeds expenditure (tax > spending)
• Building societies


  A financial institution which is entirely owned by its members. It offers banking and other financial services to these members
• Capital


  The machinery and tools used in the creation of goods and services. This could include a factory or a coffee machine. The payment for capital is interest. (This is usually because it is purchased using borrowed money.)
• Claimant account


  Measures unemployment by the number of individuals claiming unemployment benefit that week
• Commercial banks (also known as high street or retail banks)


  These look to make profits by selling financial services to households and businesses
• Competitive market


  A market where a wide variety of producers are competing with each other to supply goods and services
• Complementary goods


  Two goods which are often consumed together. Examples could include strawberries and cream or milk and cereal
• Consumers


  A person who purchases goods and services for personal use
• Cost push inflation


  When inflation is caused by an increase in the costs of production. For example, an increase in wages or the cost of raw materials
• Demand


  The quantity of a good or service that consumers are willing and able to buy at a given price and a given time period
• Demand curve

  A curve showing the quantity demanded for a good or service at any given price level
• Demand pull inflation


  When inflation is caused by an increase in demand for goods and services within an economy (this often occurs during a recovery or boom stages of the economic cycle)
• Diseconomies of scale


  Where an increase in a firm's output results in an increase in its average costs
• Division of labour


  When production of a good or service is split into a number of smaller tasks and employees then specialise in completing each of these tasks with the intention of increasing productivity
• Economic resource

  Resources which are scarce. Due to them being limited decisions will have to be made about how they are used within an economy
• Economies of scale


  Where an increase in a firm's output results in a fall in average costs. Note there is not requirement for students to know the relevant diagram for Economies of scale but teachers may choose to use this in order to aid teaching
• Enterprise/entrepreneurship

  Individuals who take the factors of production and convert them into goods and services which can be sold for profit. The payment for enterprise is profit
• Equilibrium price


  When demand for a good or service is equal to supply. When a market is in equilibrium then the price is likely to be stable
• Excess demand


  Where quantity demanded of a good or service exceeds supply, resulting in shortages and higher prices
• Excess supply


  Where quantity supplied of a good or service exceeds demand, resulting in shortages and higher prices
• Exchange rates


  The value of a currency in terms of another. For example, £1 = $1.2
• Exports

  Goods which are produced within a country and then sold abroad
• Factors of production

  • Land
  • Labour
  • Capital
  • Enterprise
• Factor markets

  The market for the factors of production; land, labour and capital
• Financial economies of scale


  Firms being able to take advantage of lower interest rates as a result of their increased size. (Large firms can often borrow at a lower interest rate than smaller firms as they are considered a lower risk for lenders.)
• Fiscal policy


  The use of government spending and taxation in order to influences the level of demand within the Economy
• Fixed costs


  Costs which do not change with output for example rent for a shop would be the same regardless of how many shoes it sold over the course of the month
• Free trade


  Trade that takes place without tariffs or other barriers
• Frictional unemployment


  This is caused by imperfect information where workers are unable to find work for their skill set
• Full employment


  When all those who are fit, able and willing to work in the next two weeks are employed
• Globalisation


  The process of growing economic integration between the world's economies. Goods can be produced anywhere, sold anywhere and the profits stored anywhere globally
• Goods


  Tangible or physical products
• Government


  The organisation regulating consumers and producers
• Government intervention


  When the government attempts to influence markets in order to correct market failure
• Government provision


  Where the government chooses to provide a good or service for free. For example, healthcare in the UK
• Gross domestic product


  The value of all goods and services produced within an economy within one year