economics definition
collusion
collusion occurs when one producer agrees with others to limit output and so raise prices and profits
fixed cost
fixed cost is a cost that dos not change with the quantity produced, e.g. rent
intermediate goods
goods which are bought to be used in the production of other goods and services
heterogeneous goods
goods which are in a classification of their own and are different from other goods in terms of design, quality
macroeconomics
macroeconomics is concerned with the functioning of the economy as a whole
marginal cost
mc is the additional to the total cost that a firm incurs when it produces one additional unit of its production
implicit costs
opportunity costs experienced by the producer which are not reflected in contrary payments, such as self owned resources in production
law of demand
other things being equal (ceteris paribus), the higher the price of a good, the lower is the quantity demanded
law of supply
other things being equal, suppliers will supply more of a good or service to the market when the price increases, and less if the price of the product or service decreases
microeconomics
the branch of economics in which the decisions of individual consumers, households, firms or organisations are studied in isolation from the rest of the economy
total cost
the cost of producing a particular quantity of a firms products, it consists of fixed costs and variable costs
accounting profit
the difference between total revenue and the firms explicit cost. also known as the total profit
equilibrium position
the equilibrium position of a firm is the quantity of outputs at which profits will be maximised
average fixed cost
the fixed cost of a firm divided by the quantity produced
marginal utility
the marginal utility is the additional utility (satisfaction) that a consumer derives from consuming one extra unit of production within a given period
relatively inelastic demand
the quantity demanded is not very responsive to any changes in price. consumers are relatively insensitive to changes in price
relatively elastic demand
the quantity demanded is very responsive to any changes in price. consumers are relatively sensitive to changes in price
perfectly inelastic demand
the quantity demanded will be unchanged in the response to any changes in the price of the good or service
income elasticity of demand
the responsiveness of a products quantity demanded to consumers change in income
price elasticity of demand
the responsiveness of the quantity demanded of a product in response to a change in the price of the product
economics
the study of the use of scarce resources to satisfy unlimited human wants
supply
the sup,y of a good or service is the quantity of the product that producers are willing and able to offer for sale at a particular price
average variable cost
the total variable cost of a firm divided by the quantity sold
average cost
the unit cost per unit of production
capital goods
things which are used to produce other goods or services
perfectly elastic demand
this exists when the quantity demanded changes infinitely in response to small changes in price
perfect competition
this exists when there are so many buyers and sellers of the good or service , that no individual participant can influence the price
marginal revenue
this is the additional revenue that a firm earns when it sells one additional unit of its production
marginal product
this is the quantity of additional output that a firm can produce when it adds one additional unit of a variable input, such as labor
total profit
total profit is the difference between total revenue and total explicit cost. it is also called accounting profit
average revenue
total revenue divided by the quantity sold. it is the revenue earned from every product unit sold
total revenue
total revenue is the amount that a firm receives for the sale of its output. total revenue equals the price multiplied by the quantity sold
total utility
total utility is the sum of the marginal utilities of a consumer: it is the total satisfaction derived from the consumption of successive units of a good or service
unit elastic demand
unit elastic demand refers to an elasticity coefficient of exactly 1.unit elastic demand exists when a change in price results in an equal change in the quantity demanded
utility
utility refers to the degree of satisfaction that consumer derives from the consumption of a good or a service
variable costs
variable costs change according to changes in output, increases in output will cause total variable costs to increase and vice-versa
normal profit
a firm makes normal profit when its total revenue is equal to its total economic costs (explicit plus implicit costs)
oligopoly
a market in which a few large firms dominate the market
competitive market
a market structure in which the prices of goods and services are determined by the free interaction of supply and demand
monopoly
a market structure in which there is only one seller of the good/service with no close substitutes or significant barriers to entry by potential competitors
monopolistic competition
a market structure tat combines certain features of monopoly and perfect competition
price ceiling
a maximum price that is set for a product and sellers may not sell the product for a higher price than the price ceiling
price floor
a minimum price that is set for a good or service and sellers may not sell the product for a lower price than the price floor
economic system
a pattern of organisation which is aimed at solving the 3 main questions of what, how and whom
complement
a product that is normally used together with another product
equilibrium
a state of balance between different forces, a stable situation in which there is no cause for any change to occur
consumer
an individual who buys goods or services to satisfy their needs or wants
homogeneous goods
any category of goods where all units produced, even by different producers, is all exactly alike, e.g. maize
law of diminishing marginal utility
as an individual consumes more of a particular product, the marginal utility (or extra satisfaction derived from the last unit consumed) decreases with each successive unit
law of diminishing returns
as more of a variable input is combined with one or more inputs in a production process, points will eventually be reached where first the marginal product, then the average product, and finally the total product start to decline