Term
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Definition
| Also known as percentage taxes, the tax is a percentage of the selling price |
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Term
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Definition
| When producers allocate their resources in the most efficient way from society’s point of view. |
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Term
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Definition
| When firms buy, sell and trade the tradable permits on the market. |
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Term
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Definition
| A factor of production that comes from investment in both physical capital (stock of manufactured resources) and human capital (value of the workforce). |
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Term
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Definition
| A formal collusive agreement among multiple firms (e.g. OPEC). |
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Term
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Definition
| Resources that have no specific owner, and therefore are available to everyone. |
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Term
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Definition
| Goods that are often purchased together (e.g. automobiles and petrol). |
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Term
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Definition
| Extra utility gained by consumers from paying a price that is lower than the price they are prepared to pay for. |
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Term
| Cross-price elasticity of demand (give formula too) |
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Definition
A measure of how much demand for a product changes when there is a change in the price of another product.
XED=(∆Q_D of X)/(∆P of Y) |
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Term
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Definition
| The quantity of a good/service that consumers are willing and able to purchase at a given price over a given period of time. |
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Term
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Definition
| Goods with negative externalities that are non-beneficial and potentially harmful to society (e.g. drugs, cigarettes, alcohol etc.) |
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Term
| Diseconomies of scale (explain what may cause this too) |
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Definition
| Any increases in long-run average costs that are caused when a firm changes all of its factors of production to increase its scale of output, lead to the firm experiencing decreasing returns to scale. |
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Term
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Definition
| Economic costs of producing a good is the opportunity cost of the firm’s production. |
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Term
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Definition
The difference between the revenue received by a firm and the
opportunity cost of the inputs used. |
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Term
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Definition
| People are excluded from using the good unless they pay a price for it. |
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Term
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Definition
| Four resources that allow an economy to produce its output: land, labour, capital, management. |
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Term
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Definition
| A situation wherein an individual or a group receives the benefits of goods or services, but avoids paying for them. |
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Term
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Definition
| The value of the workforce. |
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Term
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Definition
| The earnings a firm could have made if it had employed its factors in another use, sold them to another firm or hired them out. |
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Term
| Income elasticity of demand (give formula too) |
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Definition
A measure of how the demand for a product changes when there is a change in consumer income.
YED=(∆Q_D)/∆Income |
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Term
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Definition
| Also known as expenditure taxes, taxes placed upon goods and serices that are added to the price of the product. |
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Term
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Definition
| Goods where the demand will fall as income rises since the consumer buys higher priced substitutes in place of the inferior good. |
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Term
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Definition
| When firms use money to increase their stock of capital and expand their output. |
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Term
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Definition
| A factor of production which includes the land the firm operates upon and natural resources gathered from the land. |
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Term
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Definition
| “As the price of a product falls, the quantity demanded of that product will increase, ceteris paribus.” |
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Term
| Law of diminishing returns |
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Definition
| When one or more factors are fixed, there will come a point beyond which the extra output from additional units of the variable factor will diminish. |
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Term
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Definition
| “As the supply of a product begins to fall, the price of that product will increase, ceteris paribus.” |
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Term
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Definition
| A period of time in which all factors of production are variable. |
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Term
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Definition
| The benefits in the market are equivalent to the benefits to society. |
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Term
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Definition
| The costs of the industry are equivalent to the costs to society. |
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Term
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Definition
| When a market fails to produce efficient outcomes, and in particular does not achieve allocative efficiency. |
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Term
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Definition
| Goods with positive externalities that benefit society (e.g. healthcare, education). |
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Term
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Definition
| The excess supply results in people not being able to find work, and the government supports the surplus by providing welfare support |
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Term
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Definition
| Goods that an individual must have to survive (e.g. food, shelter, clothing). |
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Term
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Definition
| No consumer is excluded from consuming such good/service (e.g. national defence). |
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Term
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Definition
| Permits issued by the government, giving firms the license to create pollution up to a certain level. |
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Term
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Definition
| The consumption of a good will not reduce the amount available of another good in the market. |
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Term
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Definition
| Goods where demand increases as consumer incomes increase (e.g. cars, real estate). |
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Term
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Definition
| The next best alternative foregone when an economic decision is made. |
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Term
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Definition
| When the government sets a maximum price below the equilibrium price, preventing producers raising the price above it. |
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Term
| Price elasticity of supply (give formula too) |
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Definition
A measure of how much the supply of a product changes when there is a change in the price of the product.
PES=(∆Q_S)/∆P |
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Term
| Price elasticity of demand (give formula too) |
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Definition
A measure of how much the quantity demanded of a certain product changes when the price of that product changes.
PED=(∆Q_D)/∆P |
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Term
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Definition
| When the government sets a minimum price above the equilibrium price, preventing producers from lowering the price below it. |
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Term
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Definition
| The sector involved in the extraction of natural resources (e.g. mining, forestry etc.). |
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Term
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Definition
| Goods and services that are both excludable and rivalrous, and therefore are provided by the market. |
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Term
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Definition
| Excess of actual earnings a producer makes from a given quantity of output, above the amount the producer would be prepared to accept for that output. |
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Term
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Definition
| A good is rivalrous if the use of it prevents the use of another good (e.g. using computers eliminates the need for pens). |
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Term
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Definition
| When the quantity available or supplied in a market falls short of the quantity demanded or required at a given time or price. |
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Term
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Definition
| A fixed amount of tax imposed upon a certain product. |
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Term
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Definition
| If supply is more elastic than demand, consumers will bear the cost of the tax. If demand is more elastic than supply, producers will bear the cost of the tax. |
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