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IB Econs microeconomics & macroeconomics definitions

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  • Course
  • IB Economics SL/HL
  • Institution
  • Anglo Chinese School , Singapore
  • Book
  • IB Economics Course Book

A comprehensive list of definitions for IB economics HL/SL, for chapter 1 (microeconomics) and chapter 2 (macroeconomics). Compiled by a 45 pointer from Singapore.

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  • June 7, 2020
  • 21
  • 2018/2019
  • Class notes
  • Unknown
  • All classes

Subjects

  • ib economics
  • ib econs
  • economics
  • economic definitions
  • ib economics definitions
  • international
  • international baccalaureate

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IB ECONOMICS DEFINITIONS



1: MICROECONOMICS
1.1 DD and SS

Demand

The willingness and ability of consumers to purchase a particular good or service at
various prices in a given time period, ceteris paribus

Supply

The willingness and ability of producers to supply a particular good or service at various
prices in a given time period, ceteris paribus

Excess demand

The quantity demanded of a good exceeds the quantity supplied of a good in a given
period of time at prevailing price

Marginal cost of production

The addition to the total cost from producing an additional unit of output

Complements

Goods that are used jointly to satisfy a particular want or need

Substitutes

Alternative products that satisfy the same wants or needs

Joint supply

Goods that are produced jointly with the same resources

Competitive supply

Goods that are produced with the same resources such that resources used in
production of one good cannot be used in production of the other goo

,Consumer surplus

The difference between what consumers are willing and able to pay for a unit of the
good and the actual amount they pay for that unit of a good

Producer surplus

The difference between the revenue producers receive from that sale of a unit of good
and the price at which producers are willing to make that unit of goods available for sale



1.2 Elasticities

PED

The responsiveness of the quantity demanded of a good or service to a change in its
price, ceteris paribus

XED

The responsiveness of a demand of a good or service to a change in the price of
another good, ceteris paribus

YED

The responsiveness of a demand of a good or service to a change in income, ceteris
paribus

PES

The responsiveness of the quantity supplied of a good or service to a change in its
price, ceteris paribus



1.3 Government intervention

Price Ceiling

Legal maximum price set below the market equilibrium price by the government

Price Floor

Legal minimum price set above the market equilibrium price by the government

, Indirect tax

Taxes levied on goods and services paid by firms to government and has the effect of
increasing cost of production



Direct tax

Taxes directly levied on the household, individual or corporation.

Subsidy

Payments from governments to firms with the aim of lowering their cost of production

Payments from government to firms to encourage the production of a merit good



1.4 Market Failure

Market Failure

The failure of the government to achieve efficiency in the allocation of society’s
resources, resulting in an over-allocation or under allocation of resources in the
absence of government intervention

Economic efficiency

Each good is produced at the minimum average cost, with individuals people and firms
getting the maximum benefit from the resources

Productive efficiency

Where firms are producing the maximum output for a given amount of input/ producing
a given output at the least cost

Allocative efficiency

When firms produce the particular combination and quantities of goods and services
that consumers most desire, when MB = MC assuming no externalities

Social efficiency

When marginal social cost is equal to marginal social benefit

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