Term
|
Definition
| scarcity in relation to wants means you face tradeoffs, therefore you have to make choices |
|
|
Term
|
Definition
| the cost of the choice you make is what you give up for it, or the opportunity cost; the amount of other products that must be forgone or sacrificed to produce a unit of a product |
|
|
Term
| choosing a little more or less |
|
Definition
| choices are usually made at the margin; we choos a little more or a little less of something |
|
|
Term
| the influence of incentives |
|
Definition
| the choices you make are influenced by incentives |
|
|
Term
|
Definition
| specialization and trade will improve the well being of all participants |
|
|
Term
| the effectiveness of markets |
|
Definition
| markets usually do a good job of coordinating trade among individuals, groups, and nations |
|
|
Term
|
Definition
| governments can occasionally improve the coordinating functions of markets |
|
|
Term
| production and standard of living |
|
Definition
| the standard of living of the average person in a particular country is dependent on its production of goods and services. A rise in the standard of living requires a rise in the output of goods and services. |
|
|
Term
|
Definition
| if the monetary authorities of a country annually print money in excess of the growth of output of goods and services, this practice will eventually lead to inflation |
|
|
Term
| inflation-unemployment tradeoff |
|
Definition
| in the short run, society faces a short run tradeoff between inflation and its level of unemployment |
|
|
Term
|
Definition
| a viewpoint that envisions individuals and institutions making rational decisions by comparing the marginal benefits and marginal costs associated with their actions |
|
|
Term
|
Definition
| the pleasure, happiness, or satisfaction obtained from consuming a good or service |
|
|
Term
|
Definition
| the comparison of marginal ("extra" or "additional") benefits and marginal costs, usually for decision making |
|
|
Term
|
Definition
| the systematic pursuit of knowledge through observing a problem, collecting data, and formulating an dtesting hypotheses to obtain theories, principles and laws. |
|
|
Term
|
Definition
| a statement about economic behavior or the economy that makes it possible to predict the probable effects of certain actions |
|
|
Term
|
Definition
| statements of the nature of the relation between two or more sets of facts |
|
|
Term
| other things equal assumptions |
|
Definition
| the assumption that factors other than those being considered are held constant |
|
|
Term
|
Definition
| a simplified picture of economic reality; an abstract generalization |
|
|
Term
|
Definition
| the part of economics concerned with such individual units as industries, firms, and households |
|
|
Term
|
Definition
| the part of economics concerned with the economy as a whole |
|
|
Term
|
Definition
| a collection of specific economic units treated as if they were one unit |
|
|
Term
|
Definition
| the analysis of facts to establish cause and effect relationships |
|
|
Term
|
Definition
| the part of economics involving value judgments about what the economy should be like |
|
|
Term
|
Definition
| the need to make choices because society's material wants for goods and services are unlimited but the resources available to satisfy these wants are limited (scarce) |
|
|
Term
|
Definition
| a schedule or curve that shows various combinations of two products a consumer can purchase with a specific money income |
|
|
Term
|
Definition
| the sacrifice of some or all of one economic goal, good, or service to achieve some other goal, good, or service |
|
|
Term
| constant opportunity cost |
|
Definition
| an opportunity cost that remains the same for each additional unit as consumer (or society) shifts purchases (production) from one product to another along a straight-line budget line (production possibilities curve) |
|
|
Term
|
Definition
| the land, labor, capital, and entrepreneurial ability that are used in the production of goods and services |
|
|
Term
|
Definition
| natural resources used to produce goods and services |
|
|
Term
|
Definition
| the physical and mental talents of individuals used in producing goods and services |
|
|
Term
|
Definition
| human-made resources (buildings, machinery, and equipment) used to produce goods and services |
|
|
Term
|
Definition
| products and services that satisfy human wants directly |
|
|
Term
|
Definition
| goods that do not directly satisfy human wants |
|
|
Term
|
Definition
| spending for the production and accumulation of capital |
|
|
Term
|
Definition
| the human talents that combine the other resources to produce a product, make non-routine decisions, innovate, and bear risks |
|
|
Term
|
Definition
| the first successful commercial introduction of a new product, the first use of a new method of production, or the creation of a new form of business organization |
|
|
Term
|
Definition
| economic resources: land, labor, capital, and entreprenurial ability |
|
|
Term
| production possibilities table |
|
Definition
| a table showing the different combinations of two products that can be produced with a specific set of resources in a full-employement, full-production economy |
|
|
Term
| production possibilities curve |
|
Definition
| a curve showing the different combinations of goods or services that can be produced in a full employment, full production economy where the available supplies of resources and technology are fixed |
|
|
Term
| law of increasing opportunity costs |
|
Definition
| as the production of a good increases, the opportunity cost of producing an additional unit rises |
|
|
Term
|
Definition
| employment of available resources so that the maximum amount of (or total value of) goods and services is produced; occurs when both productive efficiency and allocative efficiency are realized |
|
|
Term
|
Definition
| an outward shift in the prodcution possibilities curve that results from an increase in factor supplies or quality, or an improvement in technology |
|
|
Term
| post hoc, ergo propter hoc fallacy |
|
Definition
| incorrectly reasoning that when one event precedes another the first event must have caused the second event |
|
|
Term
|
Definition
| the (positive) relationship between two variables that change in the same direction, for example, product price and quantity supplied |
|
|
Term
|
Definition
| the (negative) relationship between two avariables athat change in opposite directions, for example, product price and quantity demanded |
|
|
Term
|
Definition
| the ratio of the vertical change (the rise or fall) to the horizontal change (the run) between any two points on a line. The slope of an upsloping line is positive, reflecting a direct relationship between two variables ; the slope of a downsloping line is negative, reflecting an inverse relationship between two variables |
|
|
Term
|
Definition
| the point at which a line meets the vertical axis of a graph |
|
|
Term
|
Definition
| a particular set of institutional arrangements and a coordinating mechanism for producing goods and services |
|
|
Term
|
Definition
| an economic system in which most property resources are owned by the government and economic decisions are made by a central government body - socialism or communism |
|
|
Term
|
Definition
| an economic system in which property resources are privately owned, and markets and prices are used to direct and coordinate economic activities - capitalism |
|
|
Term
|
Definition
| the right of private persons and firms to obtain, own, control, employ, dispose of, and bequeath land, capital, and other property |
|
|
Term
|
Definition
| the freedom of firms to obtain economic resources, to use these resources to produce products of the firm's own choosing, and to sell their products in market of their choice |
|
|
Term
|
Definition
| the freedom of owners of property resources to emplye or dispose of them as they see fit, and of consumers to spend their incomes in a manner that they think is appropriate |
|
|
Term
|
Definition
| that which each frim, property owner, worker, and consumer believes is best for itself |
|
|
Term
|
Definition
| the presence in a market of a large number of independent buyers and sellers competing with one another, and the freedom of buyers and sellers to enter and leave the market |
|
|
Term
|
Definition
| any institution or mechanism that brings together buyers and sellers of particular goods, services, or resources for the purpose of exchange |
|
|
Term
|
Definition
| the use of the resources of an individual, a firm, a region, or a nation to produce one or a few goods and services |
|
|
Term
|
Definition
| dividing the work required to produce a product into a number of different tasks that are performed by different workers |
|
|
Term
|
Definition
| items sellers generally accept and buyers generally use to pay for a good or service |
|
|
Term
|
Definition
| the exchange of one good or service for another good or service |
|
|
Term
|
Definition
| any item that is generally acceptable to sellers in exchange for goods and services |
|
|
Term
|
Definition
| determination by consumers of the types and quantities of goods and services that will be produced with the scarce resources of the economy |
|
|
Term
|
Definition
| the votes that consumers and entrepreneurs cast for the production of consumer and captial goods, respectively, when they purchase them in product and resource markets |
|
|
Term
| guiding function of prices |
|
Definition
| the ability of prices to bring about changes in the quantities of productas and resources demanded and supplied |
|
|
Term
|
Definition
| new and better goods and services, and new and better ways of producing or distributing them |
|
|
Term
|
Definition
| the hypothesis that the creation of new products and production methods simultaneously destroys the market power of firms that are wedded to existing products and older ways of doing business |
|
|
Term
|
Definition
| the tendency of firms and resource suppliers seeking to further their own self-interests in competitive markets to also promote th einterest of society as a whole |
|
|
Term
|
Definition
| the flow of resources from households to firms and of product from firsm to households. These flows are accompanied by revers flows of money from firms to households and from households to firms. |
|
|
Term
|
Definition
| one or more persons occupying a housing unit, who buy businesses' goods and services in the product market using income derviced from selling resources in the factor market |
|
|
Term
|
Definition
| economic entities (firms) that purchase factors of production and provide goods and services to the economy |
|
|
Term
|
Definition
| an unincorporated firm owned and operated by two or more people |
|
|
Term
|
Definition
| an unincorporated firm owned and operated by two or more people |
|
|
Term
|
Definition
| a legal entity chartered by the federal or provincial government that operates as a body distinct and separate from the individuals who own it |
|
|
Term
|
Definition
| a market in which products are sold by firms and bough tby households |
|
|
Term
|
Definition
| a market in which households sell and firms buy factors of production |
|
|
Term
|
Definition
| a schedule or curve that shows the various amounts of a product that consumers are willing and able to purchase at each of a series of possible prices during a specified period of time |
|
|
Term
|
Definition
| other things equal, as price falls the quantity demanded rises, and vice versa |
|
|
Term
| diminishing marginal utility |
|
Definition
| as a consumer increases the consumption of a good or service, the marginal utility obtained from each additional unit of the good or service decreases |
|
|
Term
|
Definition
| a change in the price of a product changes the relative expensiveness of that good and hence changes the willingness of consumers to buy it rather than other goods |
|
|
Term
|
Definition
| a change in the price of a product changes a consumer's real income (purchasing power) and thus the quantity of the product purchased |
|
|
Term
|
Definition
| a curve illustrating the inverse (negative) relationship between the quantity demanded of a good or service and its price, other things equal |
|
|
Term
|
Definition
| factors other than price that determine the quantities demanded of a good or service |
|
|
Term
|
Definition
| good or services whose consumption rises when income increases and falls when income decreases, price remaining constant |
|
|
Term
|
Definition
| goods or services whose consumption falls when income increases and rises when income decreases, price remaining constant |
|
|
Term
|
Definition
| products or services that can be used in place of each other |
|
|
Term
|
Definition
| products and services that are used together |
|
|
Term
|
Definition
| a change in the quantity demanded of a good or service at every price; a shift of the entire demand curve to the right (an increase in demand) or to the left (a decrease in demand) |
|
|
Term
| change in quantitiy demanded |
|
Definition
| a movement from one point to another on a fixed demand curve |
|
|
Term
|
Definition
| a schedule or curve that shows the amounts of a product that producers are willing and able to make available for sale at each of a series of possible prices during a specific period |
|
|
Term
|
Definition
| the principle that, other things equal, an increase in the price of a product will increase the quantity of it supplied, and conversely for a price decrease |
|
|
Term
|
Definition
| a curve illustrating the positive (direct) relationship between the quantity supplied of a good or service and its price, other things equal |
|
|
Term
|
Definition
| causes other than price that determine the quantities supplied of a good or service |
|
|
Term
|
Definition
| a change in the quantity supplied of a good or service at every price; a shift of the supply curve to the left or right |
|
|
Term
| change in quantity supplied |
|
Definition
| a movement from one point to another on a fixed supply curve |
|
|
Term
|
Definition
| the price in a competitive market at which the quantity demanded and hte quantity supplied are equal |
|
|
Term
|
Definition
| the quantity demanded and supplied at the equilibrium price in a competitive market |
|
|
Term
|
Definition
| the amount by which the quantity supplied of a product exceeds the quantity demanded at a specific (above-equilibrium) price |
|
|
Term
|
Definition
| the amount by which the quantity demanded of a product exceeds the quantity supplied at a specific (below-equilibrium) price |
|
|
Term
| rationing function of prices |
|
Definition
| the ability of the competitive forces of supply and deamnd to establish a price at which selling and buying decisions are consistent |
|
|
Term
|
Definition
| the production of a good in the least costly way |
|
|
Term
|
Definition
| the distribution of resources among firms and industries to produce the goods most wanted by society |
|
|
Term
|
Definition
| a legally established maximum price for a good or service |
|
|
Term
| price elastcity of demand |
|
Definition
| a measure of the responsiveness of buyers to a change in the price of a product or resource |
|
|
Term
|
Definition
| a method for calculating price elasticity of demand or price elasticity of supply that averages the two prices and two quantities as the reference points for competing percentages |
|
|
Term
|
Definition
| product or resource demand with a price elasticity coefficient that is greater than 1 |
|
|
Term
|
Definition
| product or resource demand with a price elasticity coefficient that is less than 1 |
|
|
Term
|
Definition
| demand or supply with a price elasticity coefficient that is equal to 1 |
|
|
Term
| perfectly inelastic demand |
|
Definition
| quantity demanded does not respond to a change in price |
|
|
Term
|
Definition
| quantity demanded can be any amount at a particular price |
|
|
Term
|
Definition
| the total amount a seller receives from the sale of a product in a particular time period |
|
|
Term
|
Definition
| a test to determine elasticity of demand between any two prices, by noting what happens to total revenue when price changes |
|
|
Term
|
Definition
| the larger the number of substitute goods that are available, the greater the price elasticity of demand |
|
|
Term
|
Definition
| the more a good is considered a luxury rather than a necessity, the greater is the price elasticity of demand |
|
|
Term
|
Definition
| product demand is more elastic the longer the period under consideration. comsuners often need time to adjust to changes in prices |
|
|
Term
| price elasticity of supply |
|
Definition
| the ratio of the percentage change in quantity supplied of a product to the percentage change in its price |
|
|
Term
|
Definition
| a period in which producers are unable to change the quantity of a product they produce in response to a change in its price |
|
|
Term
|
Definition
| a period of time in which producers are able to change the quantities of some but not all of the resources they employ |
|
|
Term
|
Definition
| a period of time long enough to enable producers to change the quantities of all the resources they employ |
|
|
Term
| cross elasticity of demand |
|
Definition
| the ratio of the percentage change in quantity demanded of one good to the percentage change in price of some other good |
|
|
Term
| income elasticity of demand |
|
Definition
| measures the responsiveness of consumer purchases to income changes |
|
|
Term
| demand elasticity and tax |
|
Definition
| if demand is elastic in the relevant price range, price rises modestly. the producer bears most of the tax burden. if demand is inelastic, the price to the buyer will increas substantially and most of the tax will be shifted to consumers |
|
|
Term
| supply elasticity and incidence of tax |
|
Definition
| with an elastic supply, the sales tax results in a large price increase and the tax is therefore paid mainly by consumers. if supply is inelastic, the price rise is small and sellers will have to bear most of the tax. |
|
|
Term
|
Definition
| when markets fail to function properly, whether by overproducing, underproducing, or failing to produce economically desireable goods |
|
|
Term
| demand-side market failure |
|
Definition
| when demand curves fail to reflect consumers' full willingness to pay for goods or services |
|
|
Term
| supply-side market failure |
|
Definition
| when supply curves fail to reflect the full cost of producing a good or service |
|
|
Term
|
Definition
| the difference between the maximum price consumers are willing to pay for a product and the actual price |
|
|
Term
|
Definition
| the difference between the actual price producers receive for a product and the minimum acceptable price |
|
|
Term
|
Definition
| the production of a good in the least costly way |
|
|
Term
|
Definition
| the approtionment of resources among firms and industries to produce the goods most wanted by society |
|
|
Term
|
Definition
| the surplus created by combining the consumer and producer surpluses |
|
|
Term
| efficiency (deadweight) losses |
|
Definition
| reductions of combined consumer and producer sruplus associated with underproduction or overproduction of a product |
|
|
Term
|
Definition
| goods or services that are individually consumed & that can be profitabley provided by privately owned firms because they can exclude nonpayers from receiving the benefits |
|
|
Term
|
Definition
| a situation in which when one person buys & consumes a product, it is not available for another person to buy & consume |
|
|
Term
|
Definition
| a situation in which sellers can keep epople who don't pay for a product from obtaining its benefits |
|
|
Term
|
Definition
| goods or services that can be simultaneously consumed by everyone, and from which no one can be excluded, even if they don't pay for them |
|
|
Term
|
Definition
| when the consumption of a good by one person doesn't preclude consumption of the good by others |
|
|
Term
|
Definition
| when there is no effective way of excluding indivuals from the benefit of the good once it has been created |
|
|
Term
|
Definition
| the inability of potential providers of an economically desirable but indivisible good or service to obtain payment from those who benefit, because the exclusion prinicple is not applicable |
|
|
Term
|
Definition
| comparing the marginal costs with the marginal benefits to decide whether to emply more or less resources in that project |
|
|
Term
| marginal cost = marginal benefit rule |
|
Definition
| for a government project, marginal benefit should equal marginal cost to produce maximum benefit to society |
|
|
Term
|
Definition
| goods provided by the government that fit the economist's definition of a public good but can be produced in such a way that exclusion would be possible |
|
|
Term
|
Definition
| benefits or costs from production or consumption accruing without compensation to nonbuyers & nonsellers of the product |
|
|
Term
|
Definition
| a cost imposed without compensation on third parties by the production or consumption of sellers or buyers (e.g. a manufacturer dumps toxic chemicals into a river, killing the fish sought by sport fishers). An external cost or spillover cost. |
|
|
Term
|
Definition
| a benefit obtained without compensation by third parties from the production or consumption of sellers or buyers (e.g. a beekeeper benefits when a neighboring farmer plants clover). An external benefit or spillover benefit. |
|
|
Term
|
Definition
| under the right conditions, private individuals can often negotiate their own mutually agreeable solutions to externality problems through individual bargaining with no need of government intervention |
|
|
Term
| optimal reduction of an externality |
|
Definition
| the point at which society's marginal cost and marginal benefit of reducing that externality are equal |
|
|
Term
| law of diminishing marginal utility |
|
Definition
| as a consumer increases consumption of a good or service, the marginal utility obtained from each additional unit of the good or service decreases |
|
|
Term
|
Definition
| the total amount of satisfaction derived from the consumption of a single product or a combination of products |
|
|
Term
|
Definition
| the extra utility a consumer obtains from the consumption of one additional unit of a product |
|
|
Term
|
Definition
| human behavior that seeks to maximize total utility |
|
|
Term
|
Definition
| the limit that a consumer's income (and the prices that must be paid for goods and services) imposes on the ability of that consumer to obtain goods and services |
|
|
Term
|
Definition
| to obtain the greatest utility, the consumer should allocate money income so that the last dollar spent on each good or service yields the same marginal utility |
|
|
Term
|
Definition
| a change in the price of a product changes a consumer's real income (purchasing power) and thus the quantity of the product purchased |
|
|
Term
|
Definition
| a change in the price of a product changes the relative expensiveness of that product and hence changes the consumer's willingness to buy it rather than other goods |
|
|
Term
|
Definition
| the branch of economics that combines insights from economcis, psychology, and neuroscience to better understand those situations in which acutal choice behavior deviates from the predictions made by earlier theories |
|
|
Term
|
Definition
| the current situation from which gains and losses are calculated |
|
|
Term
|
Definition
| a characteristic that makes losses feel more intense than the pleasure generated by gains |
|
|
Term
|
Definition
| an explanation of how consumers plan for and deal with life's ups and downs, as well as of why they often appear narrow minded and fail to "see the big picture." |
|
|
Term
|
Definition
| changes in people's preferences that are caused by new information that alters the frame used to define whether situations are gains or losses |
|
|
Term
|
Definition
| the idea that irrelevant information can unconsciously influence people's feelings about the status quo |
|
|
Term
|
Definition
| the idea that people sometimes look at consumption options in isolation, thereby irrationally failing to look at all of their options simultaneously |
|
|
Term
|
Definition
| the tendency that people have to put a higher valuation on anything that they currently possess (are endowed with) than on identical items that they do not. |
|
|
Term
|
Definition
| the monetary payments a firm must make to an outsider to obtain a resource |
|
|
Term
|
Definition
| the monetary income a firm sacrifices when it uses a resource it owns rather than supplying the resource in the market' equals what the resource could have earned in the best-paying alternative employment (including a normal profit) |
|
|
Term
|
Definition
| the total revenue of a firm less its explicit costs |
|
|
Term
|
Definition
| the payment made by a firm to obtain and retain entrepreneurial ability |
|
|
Term
|
Definition
| a firm's total revenue less its economic costs (both explicit costs and implicit costs) |
|
|
Term
|
Definition
| a period of time in which producers are able to change the quantities of some but not all of the resources they employ |
|
|
Term
|
Definition
| a period of time long enough to enable producers to change the quantities of all the resources they employ |
|
|
Term
|
Definition
| the total output (total quantity) of a particular good or service produced by a firm |
|
|
Term
|
Definition
the extra output associated with adding a unit of a variable factor to the production process
marginal product = change in total product/change in labor input |
|
|
Term
|
Definition
also called labor productivity, is output per unit of labor input
average product = total product/units of labor |
|
|
Term
| law of diminishing returns |
|
Definition
| as successive increments of a variable factor are added to a fixed factor, the marginal product of the variable factor will eventually decrease |
|
|
Term
|
Definition
| costs that in total don't change when the firm changes its output |
|
|
Term
|
Definition
| costs that increase or decrease with a firm's output |
|
|
Term
|
Definition
the sum of fixed cost and variable cost
TC = TFC + TVC |
|
|
Term
|
Definition
| average fixed cost + average variable cost = average total cost |
|
|
Term
|
Definition
a firm's total fixed cost divided by output
AFC = TFC (total fixed costs)/Q (quantity)
must decline as output increases/spreading of overhead |
|
|
Term
| average variable cost (avc) |
|
Definition
a firm's total variable cost divided by output
AVC = TVC (total variable cost)/Q (quantity)
reflects the law of diminishing returns |
|
|
Term
|
Definition
a firm's total costs divided by output
Average total costs = Total costs/Q or
Average total costs = Total fixed Costs/Q + Total Variable Costs/Q or
Average total costs = Average fixed costs + Average Variable Costs |
|
|
Term
|
Definition
the additional cost of producing one more unit of output
MC = change in TC/ change in Q
total cost of second unit - total cost of first unit |
|
|
Term
|
Definition
| reductions in the average total cost of producing a product as the firm increases plant size (output) in the long run. |
|
|
Term
|
Definition
| increases in the average total cost of producing a product as the firm increases plant size (output) in the long run |
|
|
Term
| constant returns to scale |
|
Definition
| the range of output between the points where economies of scale end and diseconomies of scale begin |
|
|
Term
| minimum efficient scale (MES) |
|
Definition
| the lowest level of output at which a firm can minimize long-run average costs |
|
|
Term
|
Definition
| an industry in which economies of scale are so great that a single firm can produce the product at a lower average total cost than if more than one firm produced the product |
|
|
Term
|
Definition
| a market structure in which very large number of firms produce a standardized product |
|
|
Term
|
Definition
| a market structure in which one firm is the sole seller of a product or service |
|
|
Term
|
Definition
| a market structure in which a relatively large number of sellers produce differentiated products |
|
|
Term
|
Definition
| the market models of monopoly, monopolistic competition, and oligopoly considered as a group |
|
|
Term
| characteristics of perfect competition |
|
Definition
| very large numbers, standardized product, price-takers, easy entry and exit |
|
|
Term
|
Definition
| a firm in a purely competitive market that can't change market price, but can only adjust to it |
|
|
Term
|
Definition
| total revenue from the sale of a product divided by the quantity of the product sold |
|
|
Term
|
Definition
| the total number of dollars received by a firm from the sale of a product |
|
|
Term
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Definition
| the change in total revnue that results from selling one more unit of a firm's product |
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Term
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Definition
| an output at which a firm makes a normal profit but not an economic profit |
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Term
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Definition
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a method of determining the total output at which economic profit is at a maximum (or losses are at a minimum)
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MR & MC will be precisely equal at a fractional level of output. The firm should produce the last complete unit of output for which MR exceeds MC
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The rule only applies if producing is preferable to shutting down
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The rule is an accurate guide to profit maximation for all firms
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Under perfect competition P can be substituted for MR, P=MC
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Term
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Definition
| the circumstance in which a firm would experience a loss greater than its total fixed cost if it were to produce any output greater than zero; alternatively, a situation in which a firm would cease to operate when the price is less than its average variable cost |
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Term
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Definition
| a curve that shows the quantities of the product a firm in a purely competitive industry will offer to sell at various prices in the short run |
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Term
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Definition
| a curve that shows the prices at which a purely competitive industry will make various quantitiesof a product available in the long run |
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Definition
| an industry in which the entry of new firms has no effect on resource prices and thus no effect on production costs |
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Definition
| an industry in which the entry of new firms raises resource prices and thus increases production costs |
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Definition
| an industry in which the entry o ffirms lowers resource prices and thus decreases production costs |
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Term
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Definition
| producing a good in the least costly way |
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Term
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Definition
| apportioning resources among firms & industries to produce the goods most wanted by society |
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Term
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Definition
| the difference between the maximum price consumers are willing to pay and the actual price |
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Term
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Definition
| the difference between the actual price producers are willing to accept and the minimum acceptable price |
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Term
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Definition
| the hypothesis that the creation of new products and production methodds destroys the market power of firms that are wedded to existing products and older ways of doing business |
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Term
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Definition
anything artifically prevents the entry of firms into an industry
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Term
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Definition
| a product's ability to satisfy a large number of consumers at the same time |
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Term
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Definition
| increases in the value of a product to each user, including existing users, as the total number of users rises |
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Term
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Definition
| the production of output, whatever its level, at higher average (and total) cost than is necessary |
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Term
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Definition
| the actions by persons, firms or unions to gain special benefits from government at taxpayers' or someone else's expense |
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Term
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Definition
| selling a product to different buyers at different prices when the price differences are not justified by differences in cost |
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Term
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Definition
| the price of a product that results in the most efficient allocation of an economy's resources |
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Term
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Definition
| the price of a product that enables its producer to obtain a normal profit & that is equal to the average cost of producing it |
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Term
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Definition
| the loss of consumer surplus & producer surplus when output is either above or below its efficient level |
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Term
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Definition
| a market structure in which a relatively large number of sellers produce differentiated products |
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Term
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Definition
| a strategy in which one firm's product is distinguished from competing products by means of its design, realted services, quality, location, or other attribute (except price). |
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