Economics terminology

List of basic economic terms and definitions

Capital goods, real capital, or capital assets are already-produced, durable goods or any non-financial asset that is used in production of goods or services. Such events may include an increase in taxes on capital or capital holders or the government of the country defaulting on its debt that disturbs investors and causes them to lower their valuation of the assets in that country or otherwise to lose confidence in its economic strength. The company that owns a coal power plant will do their best to not have to pay for the full costs of their effects on the environment, health, and infrastructure. Antitrust government policy for dealing with monopoly. When someone says "She has a lot of money," the intended meaning is almost certainly that she has a lot of what economists would call financial wealth , which includes not only the most liquid assets which tend to pay low or zero returns , but also stocks, bonds and other financial investments not included in the technical definition. Equilibrium is the point where everybody willing to pay the market price has their demand satified, and anybody willing to produce at the market price has a buyer for the good. In econometrics, the estimate of the effect of one thing on another say, the estimate of the effect of the minimum wage upon employment decisions is said to be " biased " if the technique that was used to obtain the estimate has the effect that, a priori, the expected value of the estimated effect differs from the true effect, whatever the latter may be.

The lost potential gain is the cost of the opportunity that is accepted. Adverse selection can be a problem when there is asymmetric information between the seller of insurance and the buyer; in particular, insurance will often not be profitable when buyers have better information about their risk of claiming than does the seller.

economics 101 terms

This is one of two main sorts of market failure often associated with insurance. Though claiming to be basic, this glossary covers a surprising range of economics related words, names and phrases, with short entries. In econometrics, "dummy" generally refers to a binary variable that indicates whether a certain quality is present or absent.

This is not pure arbitrage and can be far from risk free.

Economics terminology that differs from common usage

Arbitrage pricing theory This is one of two influential economic theories of how assets are priced in the financial markets. Accumulation of human capital could also mean hiring people who are useful for doing work. Medium-size businesses employ fewer than workers. In the years following the crisis, most of the countries involved have introduced reforms designed to increase transparency and improve the health of the banking system, although some such as South Korea went much further than others such as Indonesia. Generally it is the role of government to enforce policy that makes companies take responsibility for the full cost of their actions. Austrian economic thinking was characterised by attributing all economic activity, including the behaviour of apparently impersonal institutions, to the wishes and actions of individuals. However, self-interest does not necessarily mean selfish. Some kinds of arbitrage are completely risk-free-this is pure arbitrage. Either way, there is much economic literature about charity, international aid , public spending and redistributive taxation. They have long been a feature of the sale of art and antiques in the rooms of firms such as Sotheby's and Christie's. This is one of two main sorts of market failure often associated with insurance. Within the rest of the european union several big countries pursued policies of building up national champions, allowing chosen firms to enjoy some monopoly power at home which could be used to make them more effective competitors abroad. Some economic models in the field of behavioural economics assume that self-interested individuals behave altruistically because they get some benefit, or utility , from doing so.

When there is adverse selection, people who know they have a higher risk of claiming than the average of the group will buy the insurance, whereas those who have a below-average risk may decide it is too expensive to be worth buying.

Capital A useful definition of capital is anything that can enhance the ability to do economically useful work 1. Which method will generate the best price for the seller depends on how many bidders take part and how well informed they are.

business and economics words

However, in the mids the UK followed the American lead in basing antitrust policy on whether changes in competition harmed consumers. The key to specialization is that a specialist can perform their work generally better and more quickly than a non-specialist.

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Glossary of economics