| 556482430 | estate tax | "A tax assessed on the total value of a person's private property after he/she dies." | |
| 556482431 | externality | "Either a positive or negative side-effect of production or consumption." | |
| 556482432 | gift tax | "A tax placed on gifts received from another person." | |
| 556482433 | gini coefficient | "The ratio between the area above the Lorenz curve to the total area below the line of equality. It ranges between zero and one. Societies with higher "scores" have more unequally distributed wealth or income." | |
| 556482434 | Lorenz curve | "A graph that shows the relative equality of the income or wealth distribution in a society." | |
| 556482435 | marginal private benefit | "The private benefit of consuming an additional unit of a good or service; benefit obtained by the consumer only." | |
| 556482436 | marginal private cost | "The private cost of producing an additional unit of output; costs incurred by the producer/seller only." | |
| 556482437 | marginal social benefit | "The benefit to society of consuming an additional unit of a good or service. This includes marginal private benefit and the external benefits that are captured by non-buyers." | |
| 556482438 | marginal social cost | "The cost to society of producing an additional unit of output. This includes marginal private costs and those external costs that are incurred by third parties." | |
| 556482439 | market failure | "The failure to provide a good/service or to allocate goods/services in a socially optimal manner." | |
| 556482440 | negative externality | "A side-effect of production or consumption which places a cost on someone other than the consumer or producer of the good or service." | |
| 556482441 | non-excludable | "The condition in which benefit of a good or service cannot be withheld if a consumer does not pay for it." | |
| 556482442 | non-rival | "The condition in which one person's consumption of a good or service does not prevent another person from consuming the exact same good or service." | |
| 556482443 | positive externality | "A side-effect of production or consumption which provides a benefit to someone other than the consumer or the producer of the good or service." | |
| 556482444 | progressive tax | "A tax which takes a greater percentage of income from households with high income than households with low income." | |
| 556482445 | proportional tax | "A tax which takes the same percentage of income from all households." | |
| 556482446 | public good | "A good or service that is non-excludable and non-rivalrous." | |
| 556482447 | regressive tax | "A tax which takes a greater percentage of income from households with low income than households with high income." | |
| 556482448 | rival | "The condition in which one person's consumption of a good or service prevents another person from consuming the exact same good or service." | |
| 556482449 | socially optimal | "The market condition that is met when the marginal social benefit equals marginal social cost. Also known as the allocatively efficient level of output." | |
| 556482450 | subsidy | "A payment from the government that is made to a producer of a good/service." | |
| 556482451 | derived demand | "Demand for goods and services creates a demand for the factors of production to produce those goods or services. Thus, demand for resources is derived from (and changes with) the demand for the products those resources make." | |
| 556482452 | factor market | "The market in which the factors of production are bought by firms and sold by households." | |
| 556482453 | marginal factor cost | "The cost of employing one additional unit of a factor; change in total cost divided by change in quantity of the factor in question." | |
| 556482454 | marginal revenue product | "The added revenue a firm gains when employing an additional unit of a factor. Change in total revenue divided by change in the quantity of the factor in question." | |
| 556482455 | monopsony | "A market dominated by a single consumer." | |
| 556482456 | unions | "Organizations of workers who seek to increase the wage rates, working conditions, and number of jobs available in their industries." | |
| 556482457 | wage | "The price of labor per unit of time." | |
| 556482458 | wage taker | "Firms who hire labor in perfectly competitive labor markets are wage takers; they can hire any quantity of workers desired for a market wage rate." | |
| 556482459 | accounting profit | "Total revenue a firm receives minus its explicit costs. Economic profit plus normal profit." | |
| 556482460 | average fixed cost (AFC) | "Fixed cost divided by the quantity of a firm's output. Decreases at a decreasing rate as output rises." | |
| 556482461 | average product | "The total product of a firm divided by the amount of a particular input used to produce the total product." | |
| 556482462 | average total cost (ATC) | "The sum of average fixed cost and average variable cost. Total costs incurred divided by number of units produced. Typically falls and then rises as output increases." | |
| 556482463 | average variable cost (AVC) | "Variable cost divided by the quantity of a firm's output. Typically falls and then rises as output increases." | |
| 556482464 | barriers to entry | "Anything that prohibits or discourages new firms from entering into a market." | |
| 556482465 | cartel | "A group of producers in an industry who collude in order to form a functional monopoly." | |
| 556482466 | collusion | "Agreement by producers in an industry to cooperate and set prices instead of competing with one another." | |
| 556482467 | commodity | "A good that is identical regardless of which firm produced it." | |
| 556482468 | constant returns to scale | "This exists when a firm's long-run average total cost remains constant as the firm's size increases." | |
| 556482469 | copyright | "The government protection of someone's intellectual property from being taken or sold by another. Serves as a barrier to entry of new firms, giving the owner of the copyright monopoly power." | |
| 556482470 | decreasing (marginal) returns | "This happens when both total product and marginal product both decrease as an input is added to the production process." | |
| 556482471 | diminishing marginal returns | "This happens when marginal product is decreasing while total product is still increasing as an input is added to the production process." | |
| 556482472 | diseconomy of scale | "This exists when a firm's long-run average total cost increases as the firm's size increases. The firm becomes less productively efficient as output rises in the long run. Also known as decreasing returns to scale." | |
| 556482473 | dominant strategy | "In game theory, a strategy which a player always chooses independent of the other player's choice." | |
| 556482474 | economic profit | "Profits earned by a firm over and above normal profit. Areas of profit shown on economic graphs are economic profit (or loss) and encourage new firms to join industries in which they can expect to earn more than normal profit." | |
| 556482475 | economy of scale | "This exists when a firm's long-run average total cost declines as the firm's size increases. The firm becomes more productively efficient as output rises in the long run. Also known as increasing returns to scale." | |
| 556482476 | excess capacity | "The difference in the log run between the quantity that a perfectly competitive market produces and the quantity produced by monopolistically competitive firms. Underutilization of the factories or productive capabilities of each firm; amount by which a firm would increase production to be productively efficient." | |
| 556482477 | firm | "An organization that produces a good or a service in order to make a profit for its owner or owners. Many people refer to a firm as a business. A fundamental assumption of economics is that firms seek to maximize profits." | |
| 556482478 | fixed cost | "A cost that does not change as a firm's production changes. This cost is incurred prior to producing even the first unit." | |
| 556482479 | game theory | "A situation in which a discrete number of players can be identified, each has specific strategies or choices, and the payoffs to each player can be quantified for strategic analysis." | |
| 556482480 | geographic monopoly | "A market condition in which a firm faces no competition in a certain geographic area." | |
| 556482481 | government monopoly | "A market condition in which government provides a good or service and prevents the private sector from competing in the market." | |
| 556482482 | homogenous products | "Products that are identical or so similar that consumers can't or don't distinguish between the products made by various firms." | |
| 556482483 | increasing (marginal) returns | "This happens when both total product and marginal product both increase as an input is added to the production process." | |
| 556482484 | interdependence | "The condition in which the decisions of producers are based on the possible decisions of other producers." | |
| 556482485 | kinked demand curve | "Illustrates price rigidity in a non-colluding oligopoly." | |
| 556482486 | long run | "The production period in which all of a firm's inputs can be varied and in which firms can enter or exit various industries." | |
| 556482487 | long run average total cost (LRATC) | "A graph which shows a firm's average total cost as it varies its size and displays economies of scale and/or diseconomies of scale." | |
| 556482488 | marginal cost (MC) | "The cost of producing an additional unit of output. Change in total cost divided by change in output." | |
| 556482489 | marginal product | "The additional output which is produced when an additional unit of input, often labor, is added to the production process." | |
| 556482490 | monopolistic competition | "A relatively competitive market structure in which many firms compete, each having limited ability to set prices and earn economic profits because of product differentiation." | |
| 556482491 | monopoly | "A market structure with only one seller." | |
| 556482492 | natural monopoly | "A market condition in which a firm is able to prevent competition because its economy of scale allows it to produce at a lower average total cost than any smaller competitor could." | |
| 556482493 | normal profit | "Amount of accounting profit that a firm would earn equal to fair market value of the resources the firm's owner uses. In particular, this includes the wages or salary that the entrepreneur could have earned working for another firm." | |
| 556482494 | oligopoly | "A market structure in which a few firms dominate and behave interdependently." | |
| 556482495 | patent | "A government-granted license to be the sole producer of a new good or service. Similar in function to a copyright because it is a source of monopoly power for the sole legal producer." | |
| 556482496 | payoff matrix | "A grid that shows the outcomes of decisions made by producers in a game which can be used to determine dominant strategies." | |
| 556482497 | perfect competition | "A market condition in which individual buyers and sellers have no influence over price because they are small, independent, trade in commodities, and are unable to place barriers to entry or exit from the market." | |
| 556482498 | perfect price discrimination | "The ability of a monopolist to charge each individual consumer the highest price the consumer would willingly pay for a good or service. Because each buyer pays his or her reservation price, there is no consumer surplus." | |
| 556482499 | price discrimination | "The ability of some producers to charge consumers different prices for the same good or service based on different customers' willingness to pay." | |
| 556482500 | price leadership model | "When on firm in an oligopoly sets the price for the industry and other firms defer to the price." | |
| 556482501 | price taker | "Firms in perfect competition are assumed to be price takers because they cannot control the market price for the good they sell." | |
| 556482502 | product differentiation | "The efforts by firms to make their products appear different from those of competitors. Also known as non-price competition." | |
| 556482503 | production function | "The amount of output varies as inputs are added in production. Typically, output increases as inputs are added, but often at a decreasing rate." | |
| 556482504 | profit | "The revenue a firm has remaining after paying all of its costs." | |
| 556482505 | short run | "The period of production time in which at least one input is constant." | |
| 556482506 | tacit collusion | "When oligopolies end up colluding unintentionally." | |
| 556482507 | technological monopoly | "A market condition in which the firm's possession of either a patent or copyright prevents other firms from legally competing in the market for a good or service." | |
| 556482508 | total cost | "The sum of fixed and variable costs. Economists include implicit costs as costs." | |
| 556482509 | total product | "All of a firm's output created by its inputs." | |
| 556482510 | variable cost | "A cost that changes with the firm's level of production." | |
| 556482511 | complementary goods | "Goods that are consumed together, such as cars and gasoline or peanut butter and jelly." | |
| 556482512 | consumer surplus | "The difference between the equilibrium price in the market and the price consumers are actually willing to pay for a good or service. On a graph, it is represented as the area beneath the demand curve and, above the price paid, and to the left of the quantity purchased." | |
| 556482513 | consumer(s) | "People who buy goods and services." | |
| 556482514 | cross-price elasticity | "The percentage change in the quantity demand for one good divided by the percentage change in the price of a related good. It determines whether goods are compliments (if negative) or substitutes (if positive)." | |
| 556482515 | deadweight loss | "The loss of consumer and producer surplus that occurs when a quantity other than equilibrium quantity prevails in the market. It results from over- or under-production of a good and is associated with allocative inefficiency." | |
| 556482516 | demand | "The willingness and ability of consumers to buy goods and services at the various prices that exist in the market within a specified time frame. Describes the inverse relationship between quantity demanded and the price that is often expressed as a graphical curve or a tabular schedule." | |
| 556482517 | demand curve | "A downward-sloping curve that illustrates consumers' demand for goods and services as various prices." | |
| 556482518 | determinants of demand | "The non-price factors that cause demand to either increase or decrease, such as number of consumers, compliments, substitutes, etc." | |
| 556482519 | determinants of supply | "The non-price factors that cause supply to either increase or decrease, such as number of producers, technology, government action, etc." | |
| 556482520 | diminishing marginal utility | "Each additional unit of a good or service that is consumed gives less additional satisfaction or utility than the previous unit that was consumed. One of the reasons why price and quantity demanded have an inverse relationship." | |
| 556482521 | effective price ceiling | "A price ceiling is a legal maximum price set below the equilibrium price. This results in the quantity demanded exceeding the quantity supplied at the ceiling price, which creates a shortage." | |
| 556482522 | effective price floor | "A price floor is a legal minimum price set above the equilibrium price. This results in the quantity supplied exceeding the quantity demands at the floor price, which creates a surplus." | |
| 556482523 | elastic | "Describes a rate of change in quantity that is greater (in percentage terms) than the rate of change in price." | |
| 556482524 | elasticity | "The sensitivity of quantity changes relative to changes in other factors, often prices." | |
| 556482525 | equilibrium | "The condition that exists in the market when a single price and quantity result in the intersection of supply and demand. The natural price-quantity combination at which neither a shortage or surplus exists." | |
| 556482526 | excise tax | "A per-unit tax on the production of a good or service. Tend to reduce supply, decreasing quantity of a good that is sold and increasing the price that buyers pay." | |
| 556482527 | income effect | "Consumers' buying power changes inversely to changes in price. This is one reason for the inverse relationship expressed in the law of demand. Consumers buy fewer units at higher prices because their same nominal income has less purchasing power." | |
| 556482528 | income elasticity of demand | "The % change in the quantity demanded divided by the % change in consumers' income. Measures whether and how much buying increases (typically) or decreases when income rises. It determines whether goods are normal (if positive) or inferior (if negative)." | |
| 556482529 | inelastic | "Describes a rate of change in quantity that is less (in % terms) than the rate of change in price." | |
| 556482530 | inferior good | "A good whose demand varies inversely with consumers' incomes." | |
| 556482531 | law of demand | "The price and quantity demanded of a good are inversely related because of income effect, substitution effect, and diminishing marginal benefits." | |
| 556482532 | law of increasing marginal cost | "The cost of producing each additional unit of a good or service incurs a greater cost than the previous unit. Results from the need to use resources that are less and less well-suited to production of that good as quantity produced increases." | |
| 556482533 | law of supply | "The price and quantity supplied of a good are directly related. Higher prices induce increased production quantities." | |
| 556482534 | marginal utility | "The additional satisfaction a consumer gets from consuming an additional unit of a good or service. Change in total utility divided by change in quantity consumed." | |
| 556482535 | normal good | "A good whose demand varies directly with consumers' incomes." | |
| 556482536 | price ceiling | "A maximum price for a good or service that cannot be legally exceeded." | |
| 556482537 | price elasticity of demand | "The responsiveness of quantity changes relative to price changes; the % change of quantity demanded divided by the % change in price." | |
| 556482538 | price elasticity of supply | "The % change of quantity supplied divided by the % change in price." | |
| 556482539 | price floor | "A minimum price for a good or service that cannot be legally undermined." | |
| 556482540 | producer surplus | "The difference between the equilibrium price in the market and the price producers would willingly accept for a good or service. On a graph, it is represented as the area beneath the supply curve and, below the price paid, and to the left of the quantity sold." | |
| 556482541 | producer(s) | "People who make and sell goods and services." | |
| 556482542 | quantity demanded | "The amount of a good or service that consumers are willing and able to buy at a given price in a specified period of time." | |
| 556482543 | quantity supplied | "The amount of a good or service that producers are willing and able to sell at a given price in a specified period of time." | |
| 556482544 | shortage | "The condition that exists when the quantity demanded exceeds the quantity supplied. Indication of price being lower than equilibrium level." | |
| 556482545 | substitute goods | "Goods that are used in place of each other. For example, margarine can replace butter." | |
| 556482546 | substitution effect | "The tendency of consumers to substitute lower-priced items for higher-priced items. A reason why the law of demand is true; consumers purchase fewer units at higher prices because substitutes (whose prices are unchanged) seem relatively cheaper." | |
| 556482547 | supply | "The willingness and ability of producers to offer a good or service for sale at various prices which exist in the market within a specified time frame. Describes the positive relationship between quantity supplied and the price that is often expressed as a graphical curve or a tabular schedule." | |
| 556482548 | supply curve | "An upward-sloping curve that illustrates producers' willingness and ability to bring units of a good or service to market during a particular time period." | |
| 556482549 | surplus | "The condition that exists when the quantity supplied exceeds the quantity demanded. Indication of price being higher than equilibrium level." | |
| 556482550 | total revenue | "The price of a good or service multiplied by the quantity sold." | |
| 556482551 | total revenue test | "A test for price elasticity of demand. If price changes vary directly with total revenue, then the demand is inelastic. If price changes vary inversely with total revenue, then demand is elastic. If price changes do not cause a change in total revenue, then demand is unit elastic." | |
| 556482552 | unit elastic | "Describes % change in quantity that is equal to % change in price." | |
| 556482553 | utility | "The want-satisfying power that goods and services provide. The amount of usefulness or satisfaction that a consumer gets from consuming a good or service." | |
| 556482554 | utility maximization | "Economists assume that consumers always try to maximize their total utility. With a budget, consumers seek combinations of the goods they buy which yield the greatest overall level of satisfaction." | |
| 556482555 | utility maximization rule | "MUx/Px = MUy/Py" | |
| 556482556 | absolute advantage | "Where a country is able to produce more output than other countries using the same input of factors of production." | |
| 556482557 | allocative efficiency | "The amount of production that benefits society the most. It is achieved when the marginal benefit of production equals the marginal cost. Also known as the socially optimal level of output. A society is allocatively efficient when it is choosing to make the mix of goods that best satisfy the wants of its population." | |
| 556482558 | basic economic problem | "What to produce, how to produce, and who to produce for?" | |
| 556482559 | capital | "Human-made resources used to produce goods and services. The tools, machines, factories, and buildings used to produce goods and services. Includes physical capital, which ranges from hammers to industrial robots and human capital, which is the know-how or specialized skills that get combine with labor through education and training." | |
| 556482560 | capital goods | "Human-made resources used to produce goods and services." | |
| 556482561 | ceteris paribus | "All other things equal - the assumption that all other things are held equal, or constant, except those under study. Ceteris paribus allows economists to understand the relationship between economic variables. As in science, economists like to isolate one factor that mau be changing at a given time to better understand cause and effect." | |
| 556482562 | circular flow diagram | "A diagram showing the flow of payments and receipts between domestic firms and domestic households. Money passes from households to firms in return for goods and services. Money passes from firms to households in return for the factors of production provided by households. Circular flow models help visualize how spending becomes income and how market types relate to one another. Complex versions of the circular flow can include activities of government and international trade." | |
| 556482563 | command economy | "An economic system in which the government controls the factors of production and makes all decisions about their use and about the distribution of income. The government decides what to produce, how to produce, and for whom to produce. Often contrasted with market economy because these are the two basic extremes; societies can choose strategies for managing the scarcity problem that place them along the spectrum between these two extremes." | |
| 556482564 | comparative advantage | "Where a country is able to produce a good at a lower opportunity cost of resources than another country. Having comparative advantage in production of a good is the basis of the economic arguement for why specialization and trade can benefit two individuals or societies." | |
| 556482565 | consumer goods | "Products and services that satisfy human wants directly." | |
| 556482566 | economic growth | "An increase in the actual level of output of goods and services produced by an economy." | |
| 556482567 | economic system | "A particular set of institutional arrangements and a coordination mechanism for solving the basic economic problem." | |
| 556482568 | economics | "The study of how to best allocate scarce resources amongst unlimited wants. It is based on the assumption that people are rational and make rational choices." | |
| 556482569 | economist | "An individual who studies economics." | |
| 556482570 | entrepreneur | "An individual who possesses the factor of production called entrepreneurship. Entrepreneurs run firms that attempt to maximize profit." | |
| 556482571 | entrepreneurship | "The human resource that combines the other factors of production to produce goods and services. The special ability of some individuals to take risks and combine land, labor, and capital in new ways inorder to make profits by providing a good or service instead of selling their labor to an employer." | |
| 556482572 | factors of production | "The resources of society used in the process of production (land, labor, capital, entrepreneurship)." | |
| 556482573 | labor | "People's physical and mental talents and efforts that are used to help produce goods and services." | |
| 556482574 | land | "Natural resources used to produce goods and services. An economist's definition of land includes land area and the minerals, oil, timber, and other useful materials that the land provides. Sometimes it is used so broadly as to be nearly synonymous with raw materials." | |
| 556482575 | macroeconomics | "The study of the behavior of the economy as a whole." | |
| 556482576 | marginal analysis | "The comparison of marginal benefits and marginal costs, usually for decision making." | |
| 556482577 | marginal benefit | "The additional benefit of consuming 1 more unit of good or service - OR - the change in total benefit when 1 more unit is consumed." | |
| 556482578 | marginal cost | "The additional cost of producing 1 more unit of output - OR - the change in total cost when 1 more unit is produced." | |
| 556482579 | market | "A forum for interactions between demanders wishing to make purchases and suppliers wishing to make sales. Markets exist wherever buyers and sellers meet to exchange goods, services, or the factors of production." | |
| 556482580 | market economy | "An economic system in which individuals own the factors of production and decide individually how to use them. It relies on individual's pursuing their own self-interest in the market. Market economies use priced to guide production decisions in a decentralized manner. Buyers "vote" with their spending dollars, making goods more expensive, thereby encouraging producers to make more of goods that are more desired and useful." | |
| 556482581 | microeconomics | "The study of the behavior of individual consumers, firms, and markets." | |
| 556482582 | opportunity cost | "The cost of any activity measured in terms of the best alternative activity which is forgone. It includes explicit costs (money payments made) and implicit costs (nonmonetary costs or sacrifices)." | |
| 556482583 | production possibilities curve | "A diagram showing the different combinations of two goods or services that can be produced when fully using all factors of production. Also known as pruduction possibilities frontier." | |
| 556482584 | productive efficiency | "The condition that exists when the least amount of waste happens in producing as much output as possible. When society is using all its resources to produce goods and services, it is productively efficient." | |
| 556482585 | scarcity | "The state in which wants exceed the amount that available resources can produce. The fundamental problem of economics." | |
| 556482586 | specialization | "The use of the resources of an individual, a firm, a region, or a nation to concentrate production on one or a small number of goods and services (and trading them for other goods and services). Specialization is based on comparative advantage." | |
| 556482587 | terms of trade | "The rate at which people trade two goods. The ratio or "real price" for which one good can be purchased for units of another." | |
| 556482588 | the invisible hand | "The tendency of individual customers and firms that seek to further their own self-interests in competitive markets to also promote the interests of society." | |
| 556482589 | trade-off | "An alternative use for scarce factors of production. Trade-offs are a result of scarcity and inherently connected to the making of choices." | |
| 556482590 | underutilization | "When the factors of production are not being fully utilized to maximize production." | |
| 556482591 | utility | "The happiness a consumer obtains from the consumption of a good or service." | |
