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Section 2 - Coggle Diagram
Section 2
Chapter 14
Market failure is the economic situation defined by an inefficient distribution of goods and services in the free market.
The Private Cost is the cost related to the working of the firm and is used in the cost-benefit analysis of the business decisions. These costs are borne by the firm itself.
An external cost is the cost incurred by an individual, firm or community as a result of an economic transaction which they are not directly involved in.
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Private benefit is the benefit derived by an individual or firm directly involved in a transaction as either buyer or seller.
An external benefit or positive externality is a benefit that a transaction or activity provides to a party that is not part of the transaction or activity.
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Chapter 11
Price elasticity of demand (PED) measures the extent to which demand for a product changes due to a change in its price
Price elasticity of demand or elasticity, is the degree to which the effective desire for something changes as its price changes.
Demand is price inelastic when a change in price causes a smaller percentage change in demand. It occurs where there is a price elasticity of demand (PED) of less than one. Goods which are price inelastic tend to have few substitutes and are considered necessities by users
Unitary elasticity means that a given percentage change in price leads to an equal percentage change in quantity demanded or supplied.
Sales revenue is the income received by a company from its sales of goods or the provision of services. In accounting, the terms “sales” and “revenue” can be, and often are, used interchangeably to mean the same thing.
Profit describes the financial benefit realized when revenue generated from a business activity exceeds the expenses, costs, and taxes involved in sustaining the activity in question.
Price discrimination is a selling strategy that charges customers different prices for the same product or service based on what the seller thinks they can get the customer to agree to.
Chapter 7
Demand refers to the willingness and ability of customers to pay a given price to buy a good or service. The higher the price, the lower its demand tends to be.
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Chap 6
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A market system is the network of buyers, sellers and other actors that come together to trade in a given product or service.
Market equilibrium is situation where for a particular good supply = demand. When the market is in equilibrium, there is no tendency for prices to change. We say the market-clearing price has been achieved.
Disequilibrium is a situation where internal and/or external forces prevent market equilibrium from being reached or cause the market to fall out of balance.
Chapter 9
Excess demand economics a situation in which the market demand for a commodity is greater than its market supply, thus causing its market price to rise
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Surplus is created when supply exceeds demand because the price is higher than the market equilibrium price.
Excess supply refers to a situation where the market price is above the equilibrium price, thus creating a surplus in the market.
Chapter 15
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A minimum price is the lowest price that can legally be set, e.g. minimum price for alcohol, minimum wage.
Privatisation can mean different things including moving something from the public sector into the private sector.
Nationalisation is the process of transforming private assets into public assets by bringing them under the public ownership of a national government or state.
Chapter 8
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Extension in supply means an increase in the quantity supplied of a product following an increase in its price.
Contraction in supply means a fall in the quantity supplied of a product following a fall in its price.
Chapter 5
Microeconomics is the study of particular markets and sections of the economy, rather than the economy as a whole.
Macroeconomics is the study of economic behaviour and decision-making in the whole economy, rather than individual markets.
Chapter 12
Price elasticity of supply (PES) measures the degree of responsiveness of the quantity supplied of a product following a change in its price.
Stocks are the raw materials, components and finished good used in the production process.
Chapter 13
The private sector is the part of the economy, sometimes referred to as the citizen sector, which is owned by private individuals or groups, usually as a means of enterprise for profit, rather than being owned by the state.
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