Secondary 5 Economics

A period in which the quantity of at least one factor of production is fixed; unrelated to calendar time.

A period in which the quantities of all factors of production can be changed.

A cost that does not vary with output, such as rent, interest and insurance; it must be paid even at zero output.

A cost that rises and falls with output, such as raw materials, packaging and piece-rate wages.

The addition to total production cost of producing one more unit; total cost change divided by the change in output.

Total production cost divided by output — the cost borne per unit on average.

Price times quantity sold — all the money a firm receives from selling its product.

Total revenue minus total cost, where total cost already includes all opportunity costs.

At a given price, profit is maximised where output expands until marginal cost equals the price.

At a given price the marginal cost table serves as the firm's supply table: each price maps to the quantity it is willing to supply.

The fall in long-run average production cost as output expands.

The rise in long-run average production cost when scale becomes excessive.

Economies of scale arising from the firm's own expansion, such as bulk-purchase discounts and spreading machine costs.

Economies of scale arising from the growth of the whole industry or district, such as supporting supply chains and pools of skilled workers.

Growth by a firm's own purchase of equipment and opening of branches to enlarge production.

Integration with firms upstream or downstream in the production chain; buying a supplier is backward, buying a retail network is forward.

Integration with rivals producing the same good, to enlarge market share and reduce competition.

Integration with firms producing different goods but sharing similar production methods or distribution channels.

Integration with firms in entirely different industries, mainly to spread business risk.

A firm's sales as a share of total market sales — a common motive for integration and expansion.

The organisation of a market, classified by the number of sellers and buyers, product nature, ease of entry and other features.

A structure with many sellers and buyers, a homogeneous product, free entry and full information; individual firms are price takers.

A structure with many sellers, differentiated products and easy entry; firms have slight control over price.

A structure with few sellers, each holding a considerable share, interdependent actions and difficult entry.

A structure with a single (or near-single) seller, few substitutes and extreme barriers to entry; the firm has the greatest pricing power.

A seller who must accept the market price: any rise above it loses all customers.

A seller with some control over price, who sets it directly — the higher the price, the lower the sales.

How easily new firms can enter a market; barriers include huge capital, licensing restrictions and brand walls.

A government-granted right to produce and sell an invention exclusively for a fixed period — a common source of monopoly power.

The market, left to itself, fails to achieve an efficient allocation; output departs from the optimal level.

The state of maximum total social surplus, achieved when marginal benefit equals marginal cost.

The sum of consumer surplus and producer surplus — the total benefit society gains from trade.

The extra benefit from consuming one more unit of a good or service.

The cost borne by the producer or consumer, such as wages, materials and rent.

Private cost plus the cost imposed on third parties — the full cost of production to society.

A good that is hard to charge for and cannot easily exclude non-payers, such as street lighting and national defence.

The surplus society loses when actual output departs from the optimal output.

The fairness of how income and resources are distributed; it may trade off against efficiency.

The collective name for aggregates such as gross domestic product and gross national income.

The market value of final goods and services produced within the economy over a period.

Output value minus the cost of intermediate inputs; the sum of value added across stages equals the value of the final product.

Goods and services bought by end users, not resold or further processed — only these are counted in GDP.

Computing GDP as private consumption expenditure plus investment expenditure, government expenditure and net exports.

GDP valued at current market prices, moving with both output and price changes.

GDP valued at fixed base-period prices, removing price changes to show movements in actual output.

The price index converting nominal GDP into real GDP: real equals nominal divided by the deflator times 100.

GDP after removing the effects of indirect taxes and subsidies on prices, reflecting what factors of production actually earn.

GDP divided by population, removing the effect of population size for easier comparison across economies.

GDP plus net factor income earned from abroad — a measure of what local residents earn.

Factor income residents earn from abroad minus factor income paid to non-residents.

The annual percentage change in real GDP — the basic gauge of expansion or contraction.

The figure after removing price changes and population differences — a common starting point for comparing living standards.

Production never traded in the market and excluded from GDP, such as homemakers' services.

How income is spread across members of society; per-capita figures cannot show its evenness.

An overall gauge of material well-being, of which national income is only one reference.

Comparing economies' performance and living standards with statistics, mindful of exchange rates and price differences.

An index of the general price level; the other tool is the GDP implicit price deflator.