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