WJEC A-Level Economics Introduction to Economic Principles (AS Unit 1) overview quiz quiz

The value of the next best alternative forgone when a choice is made

The total money spent on producing a good in a single year of output

The difference between the price a consumer pays and the price they would accept

The maximum output an economy can produce when all resources are fully used

the economy is producing more than is technically possible with its resources

resources are unemployed or being used inefficiently

the opportunity cost of producing either good is zero

the economy is on its long-run growth path

Because opportunity cost stays constant as production is switched between goods

Because the economy can always produce beyond the frontier in the long run

Because consumer goods are always more valuable than capital goods

Because resources are not equally suited to both goods, so opportunity cost rises

-1, unit elastic

-0.5, inelastic

-2, elastic

+1, perfectly elastic

an inferior good

a Giffen good

a luxury (income-elastic normal good)

a complement

the revenue producers receive above the minimum price they would accept

the total amount consumers spend on a good in a market

the area below the demand curve and above the market price

the deadweight welfare loss caused by a tax

wages are always set by the government rather than by the market

labour is demanded for the output and revenue it produces, not for itself

the supply of labour slopes downwards as wages rise

firms can never substitute capital for labour

excess demand for labour and rising wages for everyone

no change in employment because labour demand is always perfectly inelastic

the labour supply curve to shift to the left

excess supply of labour, that is unemployment, while raising pay for those in work

Rationing scarce goods to those willing and able to pay most

Guaranteeing an equal distribution of income across society

Eliminating all externalities from production and consumption

Providing pure public goods that the market cannot supply

always have perfect information and unlimited time to decide

deviate systematically because of bounded rationality, habits and framing

never respond to changes in price under any circumstances

only ever maximise the welfare of other people, not themselves

rival and excludable

produced only by private firms for profit

non-rival and non-excludable

always provided free of any cost to society

marginal social cost exceeds marginal private cost, so the good is over-produced

marginal social benefit exceeds marginal private benefit, so the good is under-produced

there is no divergence between private and social costs at all

the market automatically produces at the social optimum

a surplus of the good in the market

an increase in the equilibrium price

a shortage (excess demand) and possibly a black market

a permanent rise in the quantity supplied

a free market fails to provide a public good

government intervention causes a more inefficient allocation than the market alone

consumers behave irrationally in a competitive market

a firm with monopoly power restricts output and raises price