Microeconomic Glossary

Microeconomic Glossary - Jackson-Microeconomics Glossary...

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A Accounting profit: the total revenue of a firm less all its explicit costs. Aggregate: a collection of specific economic units that are treated as if they were one unit. Allocative efficiency: occurs when all available resources are devoted to the combination of goods most wanted by society. Asset demand for money: the demand for money as a financial asset and store of wealth. Average product: the total output of a particular good or service per unit of a resource employed. Average revenue: the total revenue per unit of a product sold. B Barriers to entry: any obstacles that prevent the entry of firms into an industry. Bilateral monopoly: a market in which there is a single seller (pure monopoly) and only one buyer (pure monopsony). C Capital: all the manufactured aids to production used to produce goods and services and distribute them to the final consumer without directly satisfying human wants. Cartels: groups of firms that agree either formally or informally to set prices and output levels of particular products among members. Collusion: a type of formal or informal arrangement to coordinate pricing strategies or fix prices. Commodity terms of trade: the rate at which one commodity can be exchanged for another expressed in physical units of each commodity. Comparative advantage: the ability to produce a commodity at relatively low opportunity cost in terms of the amount of the alternative commodity forgone. Complementary goods: goods that are used in conjunction with each other; there is an indirect relationship between the price of one good and the demand for another. Concentration ratios: the percentage of total industry sales accounted for by a given number of the largest firms in each industry. Consumption loss: a measure of the benefit lost to consumers through the imposition of industry protection that is not captured by other elements of society. Contestable markets: markets where entry to and exit from the industry can be accomplished at low or very low cost. Cost ratio: the rate, due to movements in resources between sectors, at which the production of additional units of one commodity reduces the production of another; the opportunity cost of production. Cross-price elasticity of demand: a measure of how sensitive consumer purchases of one product are to a change in the price of some other product. D Deadweight loss: the reduction in the total level of welfare (or real incomes) across society imposed by industry protection. Dependent variable: variable which changes as a consequence of a change in some other (independent) variable; the ‘effect’ or outcome. Direct relationship: where the values of two related variables change in the same direction. Distribution of income:
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This note was uploaded on 05/20/2010 for the course BUSINESS Book Summa taught by Professor N/a during the Spring '10 term at Open Uni..

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Microeconomic Glossary - Jackson-Microeconomics Glossary...

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