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ABILITY-TO-PAY PRINCIPLE  look up translate image
the view that those with greater income should pay more in taxes than those with less income.
ABSOLUTE ADVANTAGE  look up translate image
The ability to produce a good or service, using fewer resources than other producers use.
ABSOLUTE POVERTY  look up translate image
Absolute poverty measures the number of people living below a certain income threshold or the number of households unable to afford certain basic goods and services.
ABUNDANCE  look up translate image
A physical or economic condition where the quantity available of a resource exceeds the quantity desired in the absence of a rationing system.
ACCOUNTING PROFIT  look up translate image
Total revenue minus accounting costs.
ACCOUNTING PROFITS  look up translate image
total revenue minus total costs where total costs exclude the implicit opportunity costs. This is the definition of profits usually reported by firms. (chapter 8)
AD VALOREM TARIFF  look up translate image
a tax on imports evaluated as a percentage of the value of the import.
AD VALOREM TAX  look up translate image
An indirect tax based on a percentage of the sales price of a good or service. The best known example in the UK is Value Added Tax
ADAM SMITH  look up translate image
One of the founding fathers of modern economics. His most famous work was the Wealth of Nations (1776) - a study of the progress of nations where people act according to their own self-interest - which improves the public good. Smith's discussion of the advantages of division of labour remains a potent idea in the economic literature.
ADVERSE SELECTION  look up translate image
A situation in which asymmetric information about quality eliminates high-quality goods from a market.
ADVERTISING  look up translate image
Developing consumer loyalty by establishing branded products can make successful entry into the market by new firms much more expensive. Advertising can cause an outward shift of the demand curve and also make demand less sensitive to changes in price
AGEING POPULATION  look up translate image
An increase in the average age of the population arising from an increase in life expectancy and a fall in the birth rate. In the long run, an ageing population has important implications for both the level and pattern of demand in the economy. There are also widespread consequences for government welfare spending (e.g. on state pensions) and the demand for health and other need services
AGGREGATION  look up translate image
The process of combining distinct things into a single whole.
ALLOCATIVE EFFICIENCY  look up translate image
Allocative efficiency occurs when the value that consumers place on a good or service (reflected in the price they are willing and able to pay) equals the cost of the resources used up in production. The technical condition required for allocative efficiency is that price = marginal cost. When this happens, total economic welfare is maximised.
ALTERNATE GOODS  look up translate image
Other goods that firms in a market could produce instead of the good in question.
ALTERNATE MARKET  look up translate image
A market other than the one being analyzed in which the same good could be sold.
ALTERNATIVE COST  look up translate image
The value of the product that particular resources could have produced had they been used in the best alternative way; also called opportunity cost.
ANTI-COMPETITIVE BEHAVIOUR  look up translate image
Anti-competitive practices are strategies operated by firms that are deliberately designed to limit the degree of competition in a market. Such actions can be taken by one firm in isolation or a number of firms engaged in some form of explicit or implicit collusion. Where firms are found to be colluding it would be seen to be against the public interest)
ANTIDUMPING DUTY  look up translate image
a tariff imposed on a country as a penalty for dumping goods.
ARC ELASTICITY OF DEMAND  look up translate image
If Pl and Ql are the first values of price and quantity demanded, and PZ and QZ are the second values, then arc elasticity equals -[(Q1 - Q2)/(Qi + Q.z)]/[(P1 P2)l(P1 + P2)]
ASSUMPTIONS  look up translate image
judgements about features that can be ignored, to make the world easier to understand.
ASYMMETRIC INFORMATION  look up translate image
Asymmetric information occurs when somebody knows more than somebody else in the market. Such asymmetric information can make it difficult for the two people to do business together
a taxonomy used to label and group industries for statistical purposes. Each industry is given an ANZSIC code..
AVERAGE COST  look up translate image
(a) Total cost divided by the quantity of output; also called average total cost. (MY) (b) Short-Run Average (Total) Cost (SRAC) = fixed (AFC) + variable (AVC) cost per unit output; or, Long-Run Average Cost (LRAC) = total cost per unit output (all factors variable in the long-run). (HHC)
AVERAGE COST PRICING  look up translate image
Setting a monopoly's regulated price equal to long-run average cost where the LRATC curve crosses the market demand curve.
AVERAGE FIXED COST  look up translate image
Total fixed cost divided by the quantity of output produced.
AVERAGE FIXED COST (AFC)  look up translate image
fixed cost divided by the quantity produced.
AVERAGE PRODUCT  look up translate image
Total output divided by the total units of labour employed
AVERAGE PRODUCT OF LABOUR  look up translate image
the quantity produced divided by the amount of labour input.
AVERAGE REVENUE  look up translate image
total revenue divided by quantity.
AVERAGE TAX RATE  look up translate image
the total tax paid divided by the total taxable income.
AVERAGE TOTAL COST  look up translate image
Total cost divided by the quantity of output produced.
AVERAGE TOTAL COST (ATC)  look up translate image
total costs of production divided by the quantity produced (also called cost per unit).
AVERAGE TOTAL COST PRICING  look up translate image
a regulatory method that stipulates that the firm charge a price that equals average total cost.
AVERAGE VARIABLE COST  look up translate image
Total variable cost divided by the quantity of output produced.
AVERAGE VARIABLE COST (AVC)  look up translate image
variable costs divided by the quantity produced.
the situation in which the income effect outweighs the substitution effect of an increase in the wage, causing the labour supply curve to bend back and take on a negative slope at higher levels of income.
BARRIERS TO ENTRY  look up translate image
anything that prevents firms from entering a market.
BEHAVIORAL ECONOMICS  look up translate image
A subfield of economics focusing on decision-making patterns that deviate from those predicted by traditional consumer theory.
BENEFIT-COST ANALYSIS  look up translate image
An economically based tool designed to inform decision makers who try to achieve the highest level (or at least higher levels) of total surplus. Calculating total benefits net of total costs is equivalent to calculating the sum of producer and consumer surplus. Benefits .net of costs are maximized where marginal benefits equal marginal costs-a condition that is satisfied by equilibrium in a perfectly competitive market.
BENEFITS  look up translate image
A cardinal measure of economic well-being expressed in currency units. Geometrically, benefits can be computed as the area under a demand curve in the absence of external economies or diseconomies of consumption.
BETA  look up translate image
A measure of the nondiversifiable risk attached to an investment. For Glossary a stock, it shows how sensitive the stock's return is to changes in the return from all available stocks.
BILATERAL MONOPOLY  look up translate image
the situation in which there is one buyer and one seller in a market.
BLACK MARKET  look up translate image
A black market (or shadow market) is an illegal market in which the normal market price is higher than a legally imposed price ceiling (or maximum price). Black markets develop where there is excess demand (or a shortage) for a commodity. Some consumers are prepared to pay higher prices in black markets in order to get the goods or services they want. When there is a shortage, higher prices act as a rationing device. Good examples of black markets include tickets for major sporting events, rock concerts and black markets for children's toys and designer products that are in scarce supply.
BOND  look up translate image
A promise to pay back borrowed funds, issued by a corporation or government agency.
BOND YIELD  look up translate image
The return earned on a bond.
BRAND  look up translate image
A distinctive product offering which is created by the use of a logo, symbol, name, design, packaging or combination thereof. The key in designing and building a brand is to differentiate it from competitors
BRAND LOYALTY  look up translate image
Brand loyalty exists when consumers regard one particular brand of a product differently from competing products. Persuasive advertising seeks to reinforce and strengthen brand loyalty and thereby make the demand for the product more inelastic. Brand loyalty can be seen as a potential entry barrier in a market. It makes it more difficult and costly for a new product to break into the market when there are established suppliers enjoying a substantial degree of brand loyalty
BREAK-EVEN CHART  look up translate image
A chart showing how both total revenue and total cost vary with changes in the total number of units of a product that is sold. The break-even point is the minimum number that must be sold to avoid loss. (MY)
BREAK-EVEN POINT  look up translate image
the point at which price equals the minimum of average total cost.
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Microeconomics terms
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Created on 2012-08-15 05:41:53
Number of terms 773
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