econs definitions

National income

measures the monetary value of the flow of output of final goods and services produced in an economy over a period of time

gross domestic product

measures the total money value of all final goods and services produced within the geographical boundary of a country within a period of time, regardless of who produces it.

gross national product

measures the total money value of all final goods and services produced by the residents of a country during a given time period, usually a year

mat sol

measures the quantity and quality of goods and services accruing to each person in the country

non material SOL

it is the qualitative aspect of living. e.g. life expectancy, exposure to crime, literacy rates, stress levels

comparative advantage

a country enjoys comparative advantage over another when it can produce a good with a lower opportunity cost in terms of other goods forgone

principle of CA

it states that trade can benefit all countries , if each country specialises in the production of goods in which it has the lowest opportunity cost or CA

globalisation

it refers to the phenomenon where economies aare becoming increasingly integrated and more interdependent. this is achieved by increased economic cooperation between countries

scarcity

scarcity occurs when there is an excess of human wants over what can actually be produced to fulfil these wants

oppcost

opp cost refers to the value of the next best alternative forgone as a result of a decision made

production possibility curve

the PPC shows the maximum possible combinations of 2 goods a country can produce given a constant state of technology and that its limited resources are fully employed

sunk cost fallacy

it refers to a phenomenon whereby a person is reluctant to abandon a course of action because they invested heavily in it, even when it is clear that abandonment would be more beneficial

loss aversion bias

it refers to the tendency for people to prefer avoiding a loss over making an equivalent or greater gain

salience bias

itt refers to the tendency for people to focus on information that is more prominent(salient) over other less prominent but equally relevant pieces of information

consumer surplus

it is the difference between what the consumer is willing and able to pay for a good and the actual price paid for it

producer surplus

it is difference between what the producer is willing and able to accept for supplying a good and the actual price received for it

price elasticity of demand

PED measures the responsiveness of quantity demanded of a good due to a change in its price, ceteris paribus

price elasticity of supply

PES measures the responsiveness of quantity supplied of a good due to a change in price of the good itself, ceteris paribus

income elasticity of demand

YED measures the responsiveness of demand for a good due to a change in consumer’s income, ceteris paribus

cross elasticity of demand

XED measures the responsiveness of the demand for a good due to changes in the price of another good, ceteris paribus

DW loss

deadweight loss refers to the loss of social welfare when a socially optimal level of output is not reached

market failure

market failure occurs when the workings of the free market result in an inefficient allocation of resources from the perspective of society

public goods

public goods have the characteristics of non rivalry in consumption, non excludable in consumption and non rejectability in consumption

slow growth

slow growth is a period where real national income is rising at a slower rate

negative growth /recession

recession is a period where real national income falls over a period of a year

sustainable ecknomic growth

sustainable growth is achieved when the economy grows at a strong and stable rate without resulting in significant environmental degradation, and resource depletion for future generations

inclusive economic growth

inclusive growth is achieved when the economy grows at a strong and stable rate without resulting in significant worsening of income or wealth inequality

unemployment

unemployment is defined as the situation in which labour who are willing and able to work cannot find work

inflation

inflation is defined as an economic situation where there is a sustained increase in the overall general price level in an economu

economic integration

economic integration involves agreements between countries that usually include the elimination of trade barriers and the increased flow of labour and investments