Econ All Vocabs

Absolute advantage

A situation where a country can produce more output than other countries using the same input of factors of production.

Absolute poverty

Measured in terms of the basic need for survival; the amount of income a person needs to stay alive.

Actual growth

Occurs when previously unemployed factors of production are brought into use; represented by a movement from a point within a PPC to a point nearer the PPC.

Adverse selection

Occurs when a buyer and seller do not have the same information, resulting in a transaction based on uneven terms.

Aggregate demand

The total spending in an economy, consisting of consumption, investment, government expenditure, and net exports.

Allocative efficiency

The level of output where marginal cost equals average revenue, leading to the socially optimum level of output.

Asymmetric information

A situation where one party in an economic transaction has more or better information than the other party.

Balance of payments

A record of the value of all transactions between residents of a country and residents of all other countries over a period.

Consumer surplus

The additional benefit received by consumers by paying a price lower than they are willing to pay.

Demand-pull inflation

Inflation caused by increasing aggregate demand in an economy.

Economies of scale

Unit cost advantages a business may experience as a result of increasing its scale of operations.

Elasticity of demand

A measure of the responsiveness of quantity demanded of a good to a change in its price.

Inflation

A sustained increase in the general or average level of prices, resulting in a fall in the value of money.

Market failure

When markets fail to produce at the point where community surplus is maximized.

Opportunity cost

The next best alternative foregone when an economic decision is made.

Public goods

Goods or services that would not be provided by the market, characterized by non-rivalry and non-excludability.

Tariff

A tax placed on imports to protect domestic industries from foreign competition.

Utility

A measure of the satisfaction derived from purchasing a good or service.

Welfare loss

A loss of economic efficiency that can occur when equilibrium for a good is not allocatively efficient.

World Trade Organization (WTO)

An international body that sets global trading rules and resolves disputes between member countries.