Economic Concepts Vocabulary

absolute advantage: the ability of a country, individual, company or region to produce a good or service at a lower cost per unit than the cost at which any other entity produces that same good or service

 

bait and switch: ad that attracts consumers with a low-priced product, then tries

to sell them a higher-priced product

 

barriers to entry: obstacles to enter the market

 

channels of distribution: routes by which goods are moved from producers to consumers

 

comparative advantage: an economic law referring to the ability of any given economic actor to produce goods and services at a lower opportunity cost than other economic actors

 

competitive advertising: advertising that attempts to persuade consumers that a

product is different from and superior to any other

comparison shopping: getting information on the types and prices of products

available from different stores and companies

 

complementary good: a product often used with another product

 

economics: the study of how people make choices about ways to use limited  resources to fulfill their wants

 

economies of scale: low production costs resulting from the large size of output

 

elastic demand: situation in which a given rise or fall in a product’s price greatly affects the amount that people are willing to buy

 

elasticity: economic concept dealing with consumers’ responsiveness to an  increase or decrease in the price of a product

 

entrepreneur: a person who organizes and manages any enterprise, especially a business, usually with considerable initiative and risk

 

equilibrium price: the price at which the amount producers are willing to supply is equal to the amount consumers are willing to buy

 

inelastic demand: situation in which a product’s price change has little impact on

the quantity demanded by consumers

 

informative advertising: advertising that benefits consumers by providing useful information about a product

 

macroeconomics: the branch of economic theory dealing with the economy as

a whole and decision making by large units such as governments

 

microeconomics: the branch of economic theory that deals with behavior and  decision making by small units such as individuals and firms

 

need: a basic requirement for survival which includes food, clothing and shelter

 

price elasticity of demand: economic concept that deals with how much demand

varies according to changes in price

 

product life cycle: series of stages that a product goes through from first introduction to complete withdrawal from the market

 

profit maximization: a process that companies undergo to determine the best output and price levels in order to maximize its return

 

retailers: businesses that sell consumer goods directly to the public

 

shortage: situation in which the quantity demanded is greater than the quantity

supplied at the current price

 

supply curve: upward sloping line that shows in graph form the quantities supplied at each possible price

 

supply schedule: table showing quantities supplied at different possible prices

 

surplus: situation in which quantity supplied is greater than quantity demanded at

the current price

 

want: a way of expressing a need

 

wholesalers: businesses that purchase large quantities of goods from producers for

resale to other businesses

ANNEX: AUDIOSCRIPTS

Unit 1: The Factors of Production

 

     Factors of production is an economic term describing the general inputs used to produce goods and services to make a profit. Under the classical view of economics the factors of production consist of: land, labor, capital and entrepreneurship.

   Land refers to the land itself as well as the raw materials that come from the land. This includes timber, coal, precious minerals such as gold and water. It can also mean the physical area on which a factory is set.

   Labor refers to the workers who answer the phones, lift the pallets, drive the trucks, push the paperwork and do all things physical and intellectual to keep a business running.

  Capital refers to the buildings, machines and tools used in the process of production. Capital is anything from a fleet of delivery trucks to a factory building? To a printing press or a computer.

   Intellectual capital is defined as technological expertise a business acquires over time. It’s trade secrets and unique business processes.

   There is also social capital – the ability to operate because society has agreed to a system of order, conduct and law. These elements facilitate the economic environment that allows the business to operate.

Finally, entrepreneurship is the factor of production that ties the other three together. Entrepreneurship provides innovation and creativity in the use of the other factors which help to create a profitable business.

    For simplicity and analytic purposes economists and analysts usually focus on two main factors: capital and labor. The relationship of both these factors and a company’s output is referred to as the production function.