Microeconomics Vocabulary

disposable income

.Income available after paying taxes and receiving transfers from the government.

Which of the following variables have followed the so-called 'hockey-stick' trajectory—that is, little to no growth for most of history followed by a sudden and sharp change to a positive growth rate

1. GDP per capita 2. labour productivity 3. atmospheric CO2 *also connectivity to world

Characteristics of a Firm:

1. one or more individual own a set of capital goods that are used in production 2. pay wages and salaries to employees 3. direct employees (through managers they employ) in production of goods/services 4. goods and services are the property of the owners 5. owners sell goods and services on markets w intention make profit

What disposable income leaves out

1. quality of social and physical environment (friendships and clean air) 2. free time 3. goods/services we don't buy (healthcare/education provided by the gov) 4. goods/services produced within household (meal, childcare)

Markets are

1. way of connecting people who may mutually benefit 2. by exchanging goods and services (reciprocation by good, money, credit 3. through process buying and selling VOLUNTARY, are private property -not like theft or -transfers in centrally planned economy COMPETITION

gross domestic product (GDP)

A measure of the market value of the output of the economy in a given period

GDP per capita

A measure of the total goods and services produced in a country divided by the country's population. the average income of people in a country.

comparative advantage

A person or country has comparative advantage in the production of a particular good, if the cost of producing an additional unit of that good relative to the cost of producing another good is lower than another person or country's cost to produce the same two goods.

absolute advantage

A person or country has this in the production of a good if the inputs it uses to produce this good are less than in some other person or country

technology

A process taking a set of materials and other inputs, including the work of people and machines, to produce an output

purchasing power parity (PPP)

A statistical correction allowing comparisons of the amount of goods people can buy in different countries that have different currencies.

Capitalism

An economic system in which private property, markets, and firms play an important role.

labor market

In this market, employers offer wages to individuals who may agree to work under their direction. Economists say that employers are on the demand side of this market, while employees are on the supply side.

Imagine that the GDP per capita of a country had doubled every 100 years. You are asked to draw both linear and ratio scale graphs that plot GDP on the vertical axis, and the year on the horizontal axis. What will be the shapes of the curves?

Linear scale graph: An upward-sloping curve with increasing slope (called convex shape) Ratio scale graph: An upward-sloping straight line

private property

Means: 1. enjoy your possessions in a way that you choose 2. exclude others from their use if you wish 3. dispose of them by gift or sale to someone else ... 4. ... who becomes their owner NOT PRIVATE PROPERTY - air breathe, knowledge

capital goods

The equipment, buildings, raw materials, and other inputs used in producing goods and services, including where applicable any patents or other intellectual property that is used.

economic system

The institutions that organize the production and distribution of goods and services in an entire economy.

institutions

The laws and social customs governing the way people interact in society.

ownership

The right to use and exclude others from the use of something, and the right to sell the thing that is owned.

demand side

The side of a market on which those participating are offering money in return for some other good or service (for example, those purchasing bread).

supply side

The side of a market on which those participating are offering something in return for money (for example, those selling bread)

What are examples of markets? a. wartime food rationing b. action websites like ebay c. touts selling tickets outside concert halls d. sale illegal arms

b. action websites like ebay c. touts selling tickets outside concert halls d. sale illegal arms

technological progress

change in technology that reduces the amount of resources (labour, machines, land, energy, time) required to produce a given amount of the output

ratio scale

chart y axis GDP per captia doubles (ex. 250 - 500 - 1000) *Steeper line on ratio scale graph indicates growth rate of economy's GDP per capita

Which are examples of private property? a. computers belong to college b. farmer's land in Soviet Russia c. shares in company d. worker's skills

computers belong to college shares in company

growth rate

growth rate = (change in income)/(original level of income) or (Y2-Y1)/Y1)

Economics in past - key institutions were:

private property, markets, and families (goods produced) rather than firms