Scribd
Upload
99 views3 pages

IGCSE Economics Unit 2 Keyterms

This document defines 40 key economic terms related to macroeconomics, markets, and economic systems. It explains concepts like macroeconomics, demand and supply, equilibrium, price elasticity, market failures, and different types of goods and economies. Macroeconomics studies the overall economy, looking at factors such as GDP, inflation, and unemployment. The price mechanism and equilibrium concepts are important to understanding how demand and supply interact in markets to determine price and quantity. Market failures occur when private costs and benefits diverge from social costs and benefits. A mixed economic system combines elements of market and command economies with roles for both private and public sectors.

Uploaded by

NIRAJ VENKAT
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
99 views3 pages

IGCSE Economics Unit 2 Keyterms

This document defines 40 key economic terms related to macroeconomics, markets, and economic systems. It explains concepts like macroeconomics, demand and supply, equilibrium, price elasticity, market failures, and different types of goods and economies. Macroeconomics studies the overall economy, looking at factors such as GDP, inflation, and unemployment. The price mechanism and equilibrium concepts are important to understanding how demand and supply interact in markets to determine price and quantity. Market failures occur when private costs and benefits diverge from social costs and benefits. A mixed economic system combines elements of market and command economies with roles for both private and public sectors.

Uploaded by

NIRAJ VENKAT
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
You are on page 1/ 3

Unit 2 Key terms

1. Macroeconomics: Macroeconomics is the branch of economics that studies the


behavior and performance of an economy as a whole. It focuses on the aggregate
changes in the economy such as unemployment, growth rate, gross domestic
product and inflation.
2. Price Mechanism: The mechanism in which demand and supply fix the price.
3. Demand: Willingness and ability to buy a product at a price over a period of time.
4. Supply: the willingness and ability to sell a product
5. A contraction in demand: a fall in the quantity demanded caused by a rise in
the price of the product itself.
6. Extension in demand: a rise in the quantity demanded caused by a fall in the
price of the product itself.
7. contraction in supply: a fall in the quantity supplied caused by a fall in the price
of the product itself.
8. extension in supply: a rise in the quantity supplied caused by a rise in the price
of the product itself.
9. Shift in demand: Due to change in determinants other than price, demand curve
will shift to right hand and left hand side.
10. Shift in supply: Due to change in determinants other than price, supply curve
will shift to right hand and left hand side.
11. Equilibrium point: the point at which demand and supply are equal.
12. Equilibrium price: the price where demand and supply are equal.
13. Equilibrium quantity: the quantity at which demand and supply are equal.
14. Price elasticity of demand: a measure of the responsiveness of demand to a
change in price.
15. Elastic demand: It is when demand changes by a greater change than the price.
16. Inelastic demand: It is when demand changes by a smaller change than the
price.
17. Price elasticity of supply: a measure of the responsiveness of supply to a change
in price.
18. Elastic supply: It is when supply changes by a greater change than the price.
19. Inelastic supply: It is when supply changes by a smaller change than the price.
20. Market Economic System: A market economy is where the allocation of
resources is done by the market forces demand and supply,ie ; price mechanism or
market mechanism
21. Allocative efficiency: It occurs when firms produce those goods and services
which the consumers demand
22. Productive efficiency: A firm is said to be productively efficient when it
produces at the lowest possible cost per unit.

23.Dynamic Efficiency: It is when resources are used efficiently, over a period of


time.
24. Market failure: It occurs when market fails to produce the products that
consumers demand in right quantity at lowest possible price.
25.Third parties: Those not directly involved in producing or consuming a product.
26.Private costs: Costs borne by those directly consuming or producing a product.
27.Private benefits: Benefits received by those directly consuming or producing a
product.
28.External benefit: Benefit received by third parties.
29.Social benefit: Total benefit received by society of an economy.
30.External cost: Cost incurred by those not directly involved in producing or
consuming a product.
31.Social costs: Total costs incurred by society of an economy.
32.Merit goods: These goods are more beneficial than people think.
33.Demerit goods: These goods are more harmful than people think.
34.Public goods: These goods have non rivalry and non excludability characteristics.
35.Private goods: These goods have rivalry and excludability characteristics.
36.Monopoly: One seller for a product.
37. A mixed economy: an economy in which both the private and public sectors play
an important role.
38. Private sector:The private sector is the part of a country's economic system that
is run by individuals and companies, rather than the government. Most private
sector organizations are run with the intention of making profit.
39. Public sector:The public sector is that portion of an economic system that is
controlled by national, state or provincial, and local governments.
40. Mixed Economic System : A mixed economy is where the allocation of resources
is done by the market forces demand and supply and government.

You might also like