unit 1 - continuation

Definitions:
Choice: the selection of appropriate alternatives
Opportunity cost: the cost of the next best alternative.
Specialisation: the concentration by a worker or workers,firm,region or whole economy on a narrow range of goods and services.
Exchange: the process by which goods and services are traded.
Subsidy: a payment by a governing body to encourage the production or consumption of a product.
Division of a labour: the specialisation of labour where the production process is broken down into separate tasks.
Productivity: output, or production of a good or service, per worker.
Production possibility curve: this shows the maximum quantities of different combination of output of two products, given current resources and the state of technology.
Developed economy: an economy with a high level of income per head.
Developing economy: an economy with a relatively low level of income per head.
Trade-off: the calculation involved in deciding on whether to give up one good for another.
Economic growth: change in the productive potential of an economy.
Productive potential: the maximum output that an economy is capable of producing.
Economic system: the way in which production is organised in a country or group of countries.
Market economy: an economic system whereby resources are allocated through the market forces of demand and supply.
Price system: a method of allocating resources by the free movement of prices.
Supply: the quantity of a product that producers are willing and able to provide at different market prices over a period of time.
Demand:the quantity of a product that consumers are able and willing to purchase at various prices over a period of time.
Command economy: an economic system in which most resources are state owned and also allocated centrally.
Mixed economy: an economic system in which resources are allocated through a mixture of the market and direct public sector involvement.