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Economics
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Balance of payments: A summary of all the transactions that took place between the individuals, firms, and government units of one nation and those of all other nations during a year.
- Break-even: The price at which an option's cost is equal to the proceeds acquired by exercising the option. For a call option, it is the strike price plus the premium paid. For a put option, it is the strike price minus the premium paid.
- Business cycle: Recurring increases and decreases in the level of economic activity over periods of years; consists of peak, recession, though, and recovery phases.
- Capital goods: Human-made resources (building, machinery, and equipment) used to produce goods and services; goods that do not directly satisfy human wants.
- Comparative advantage: A lower relative or comparative cost than that of another producer.
- Complementary goods: Products and services that are used together. When the price of one falls, the demand for the other increases (and conversely).
- Consumer goods: Products and services that satisfy human wants directly.
- Consumer sovereignty: Determination by consumers of the types and quantities of goods and services that will be produced with the scare resources of the economy; consumers’ direction of production through their dollar votes.
- Currency appreciation: An increase in the value of a nation’s currency in foreign exchange markets; a decrease in the rate of exchange for foreign currencies.
- Currency depreciation: A decrease in the value of a nation’s currency in foreign exchange markets; a decrease in the rate of exchange for foreign currencies.
- Demand: A schedule showing the amounts of good or service that buyers (or buyer) wish to purchase at various prices during some time period.
- Economic cost: A payment that must be made to obtain and retain the services of a resource; the income a firm must provide to a resource supplier to attract the resource away from an alternative use; equal to the quantity of other products that cannot be produced when resources are instead used to make a particular product.
- Economic profit: The total revenue of a firm less its economic costs (which include both explicit costs and implicit costs); also called “pure profit” and “above-normal profit.”
- Economic resources: The land, labor, capital, and entrepreneurial ability that are used in the production of goods and services; productive agents; factors of production.
- Economies of scale: Reductions in the average total cost of producing a product as the firm expands the size of plant (its output) in the long run; the economies of mass production.
- Elastic: see elasticity
- Elasticity: The degree to which a price change for an item results from a unit change in supply (called supply elasticity) or a unit change in demand (called demand elasticity). opposite of inelasticity.
- Equilibrium price: The price in a competitive market at which the quantity demanded and the quantity supplied are equal, there is either a shortage nor a surplus, and there is no tendency for rise or fall.
- Explicit costs: The monetary payment a firm must make to an outsider to obtain a resource.
- Externalities: A benefit or cost from production or consumption, accruing without compensation to nonbuyers and nonsellers of the product.
- Fiscal policy: Changes in government spending and tax collections designed to achieve a full-employment and noninflationary domestic output; also called discretionary fiscal policy.
- Fixed costs: Any cost that does not change when the firm changes its output; the cost of fixed resources.
- Foreign exchange rates: The price paid in one’s own money to acquire 1 unit of a foreign currency; the rate at which the money of one nation is exchanged for the money of another nation.
- Free trade: The absence of artificial (government-imposed) barriers to trade among individuals and firms in different nations.
- Gross domestic product (GDP): The total market value of all final goods and services produced annually within the boundaries of the United States, whether by U.S. or foreign-supplied resources.
- Implicit costs: The monetary income a firm sacrifices when it uses a resource its owns rather than supplying the resources in the market; equal to what the resource could have earned in the best-paying alternative employment; includes a normal profit.
- Inelastic: opposite of elasticity.
- Inferior goods: A good or service whose consumption declines as income rises (and conversely), price remaining constant.
- Inflation: A rise in the general level of prices in an economy.
- Intermediate goods: Products that are purchased for resale or further processing or manufacturing.
- Law diminishing returns: The principle that as successive increments of a variable resource are added to a fixed resource, the marginal product of the variable resource will eventually decrease.
- Marginal costs: The extra (additional) cost of producing 1 more unit of output; equal to the change in total cost divided by the change in output (and, in the short run, to the change in total variable cost divided by the change output).
- Marginal revenue: The change in total revenue that results from the sale of 1 additional unit of a firm’s product; equal to the change in total revenue divided by the change in the quantity of the product sold.
- Monetary policy: A central bank’s changing of the money supply to influence interest rates and assist the economy in achieving price stability, full employment, and economic growth.
- Monopoly: A market structure in which the number of sellers is so small that each seller is able to influence the total supply and the price of the good or service.
- Oligopoly: A market structure in which a few firms sell either a standardized or differentiated product, into which entry is difficult, in which the firm has limited control over product price because of mutual interdependence (except when there is collusion among firms), and in which there is typically nonprice competition.
- Protectionism: The government's placing of duties or quotas on imports to protect of domestic industries from global competition.
- Public goods: A good or service that is indivisible and to which the exclusion principle does not apply; a good or service with these characteristics provided by government.
- Pure competition: A market structure in which a very large number of firms sells a standardized product, into which entry is very easy, in which the individual seller has no control over the product price, and in which there is no nonprice competition; a market characterized by a very large number of buyers and sellers.
- Quota: The amount of sales needed to reach a company's sales goal.
- Recession: A period of declining real GDP, accompanied by lower real income and higher unemployment.
- 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.
- Spillover benefit: A benefit obtained without compensation by third parties firm the production or consumption of sellers or buyers. Example: A beekeeper benefits when a neighboring farmer plants clover.
- Spillover cost: A cost imposed without compensation on third parties by the production or consumption or sellers or buyers. Example: A manufacturer dumps toxic chemicals into a river, killing the fish sought by sport fishers.
- Substitute goods: Products or services that can be used in place of each other. When the price of on falls, the demand for the other product falls; conversely, when the price of one product rises, the demand for the other product rises.
- Supply: A schedule showing the amounts of good or service that sellers (or a seller) will offer at various prices during some period.
- Tariff: A tax imposed by a nation on an imported good.
- Terms of trade: The rate at which units of one product can be exchanged for units of another product; the price of a good or service; the amount of one good or service that must be given up to obtain 1 unit of another good or service.
- Trade deficit: The amount by which a nation’s imports of goods (or goods and services) exceed its exports of goods (or goods and services).
- Transfer payment: A payment of money (or goods and services) by a government to a household or firm for which the payer receives no good or service directly in return.
- Variable costs: A cost that total increases when the firm increases its output and decreases when the firm reduces its output.
Economics
- Balance of payments: A summary of all the transactions that took place between the individuals, firms, and government units of one nation and those of all other nations during a year.
- Break-even: The price at which an option's cost is equal to the proceeds acquired by exercising the option. For a call option, it is the strike price plus the premium paid. For a put option, it is the strike price minus the premium paid.
- Business cycle: Recurring increases and decreases in the level of economic activity over periods of years; consists of peak, recession, though, and recovery phases.
- Capital goods: Human-made resources (building, machinery, and equipment) used to produce goods and services; goods that do not directly satisfy human wants.
- Comparative advantage: A lower relative or comparative cost than that of another producer.
- Complementary goods: Products and services that are used together. When the price of one falls, the demand for the other increases (and conversely).
- Consumer goods: Products and services that satisfy human wants directly.
- Consumer sovereignty: Determination by consumers of the types and quantities of goods and services that will be produced with the scare resources of the economy; consumers’ direction of production through their dollar votes.
- Currency appreciation: An increase in the value of a nation’s currency in foreign exchange markets; a decrease in the rate of exchange for foreign currencies.
- Currency depreciation: A decrease in the value of a nation’s currency in foreign exchange markets; a decrease in the rate of exchange for foreign currencies.
- Demand: A schedule showing the amounts of good or service that buyers (or buyer) wish to purchase at various prices during some time period.
- Economic cost: A payment that must be made to obtain and retain the services of a resource; the income a firm must provide to a resource supplier to attract the resource away from an alternative use; equal to the quantity of other products that cannot be produced when resources are instead used to make a particular product.
- Economic profit: The total revenue of a firm less its economic costs (which include both explicit costs and implicit costs); also called “pure profit” and “above-normal profit.”
- Economic resources: The land, labor, capital, and entrepreneurial ability that are used in the production of goods and services; productive agents; factors of production.
- Economies of scale: Reductions in the average total cost of producing a product as the firm expands the size of plant (its output) in the long run; the economies of mass production.
- Elastic: see elasticity
- Elasticity: The degree to which a price change for an item results from a unit change in supply (called supply elasticity) or a unit change in demand (called demand elasticity). opposite of inelasticity.
- Equilibrium price: The price in a competitive market at which the quantity demanded and the quantity supplied are equal, there is either a shortage nor a surplus, and there is no tendency for rise or fall.
- Explicit costs: The monetary payment a firm must make to an outsider to obtain a resource.
- Externalities: A benefit or cost from production or consumption, accruing without compensation to nonbuyers and nonsellers of the product.
- Fiscal policy: Changes in government spending and tax collections designed to achieve a full-employment and noninflationary domestic output; also called discretionary fiscal policy.
- Fixed costs: Any cost that does not change when the firm changes its output; the cost of fixed resources.
- Foreign exchange rates: The price paid in one’s own money to acquire 1 unit of a foreign currency; the rate at which the money of one nation is exchanged for the money of another nation.
- Free trade: The absence of artificial (government-imposed) barriers to trade among individuals and firms in different nations.
- Gross domestic product (GDP): The total market value of all final goods and services produced annually within the boundaries of the United States, whether by U.S. or foreign-supplied resources.
- Implicit costs: The monetary income a firm sacrifices when it uses a resource its owns rather than supplying the resources in the market; equal to what the resource could have earned in the best-paying alternative employment; includes a normal profit.
- Inelastic: opposite of elasticity.
- Inferior goods: A good or service whose consumption declines as income rises (and conversely), price remaining constant.
- Inflation: A rise in the general level of prices in an economy.
- Intermediate goods: Products that are purchased for resale or further processing or manufacturing.
- Law diminishing returns: The principle that as successive increments of a variable resource are added to a fixed resource, the marginal product of the variable resource will eventually decrease.
- Marginal costs: The extra (additional) cost of producing 1 more unit of output; equal to the change in total cost divided by the change in output (and, in the short run, to the change in total variable cost divided by the change output).
- Marginal revenue: The change in total revenue that results from the sale of 1 additional unit of a firm’s product; equal to the change in total revenue divided by the change in the quantity of the product sold.
- Monetary policy: A central bank’s changing of the money supply to influence interest rates and assist the economy in achieving price stability, full employment, and economic growth.
- Monopoly: A market structure in which the number of sellers is so small that each seller is able to influence the total supply and the price of the good or service.
- Oligopoly: A market structure in which a few firms sell either a standardized or differentiated product, into which entry is difficult, in which the firm has limited control over product price because of mutual interdependence (except when there is collusion among firms), and in which there is typically nonprice competition.
- Protectionism: The government's placing of duties or quotas on imports to protect of domestic industries from global competition.
- Public goods: A good or service that is indivisible and to which the exclusion principle does not apply; a good or service with these characteristics provided by government.
- Pure competition: A market structure in which a very large number of firms sells a standardized product, into which entry is very easy, in which the individual seller has no control over the product price, and in which there is no nonprice competition; a market characterized by a very large number of buyers and sellers.
- Quota: The amount of sales needed to reach a company's sales goal.
- Recession: A period of declining real GDP, accompanied by lower real income and higher unemployment.
- 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.
- Spillover benefit: A benefit obtained without compensation by third parties firm the production or consumption of sellers or buyers. Example: A beekeeper benefits when a neighboring farmer plants clover.
- Spillover cost: A cost imposed without compensation on third parties by the production or consumption or sellers or buyers. Example: A manufacturer dumps toxic chemicals into a river, killing the fish sought by sport fishers.
- Substitute goods: Products or services that can be used in place of each other. When the price of on falls, the demand for the other product falls; conversely, when the price of one product rises, the demand for the other product rises.
- Supply: A schedule showing the amounts of good or service that sellers (or a seller) will offer at various prices during some period.
- Tariff: A tax imposed by a nation on an imported good.
- Terms of trade: The rate at which units of one product can be exchanged for units of another product; the price of a good or service; the amount of one good or service that must be given up to obtain 1 unit of another good or service.
- Trade deficit: The amount by which a nation’s imports of goods (or goods and services) exceed its exports of goods (or goods and services).
- Transfer payment: A payment of money (or goods and services) by a government to a household or firm for which the payer receives no good or service directly in return.
- Variable costs: A cost that total increases when the firm increases its output and decreases when the firm reduces its output.
