2 - Technology, population and growth

Question 1

Equilibrium

Answer 1

(of a market) a state of a market in which there is no tendency for the quantities bought and sold, or the market price, to change, unless there is some change in the underlying costs, preferences, or other determinants of the behaviour of market actors. (In balance)

Question 2

Ceteris paribus

Answer 2

The literal meaning of this expression is ‘other things equal’. In an economic model it means an analysis ‘holds other things constant’.

Question 3

Relative price

Answer 3

The price of one good or service compared to another (usually expressed as a ratio).

Question 4

Incentive

Answer 4

Economic reward or punishment, which influences the benefits and costs of alternative courses of action.

Question 5

Diminishing average product of labour

Answer 5

A situation in which, as more labour is used in a given production process, the average product of labour typically falls.

Question 6

Reservation option

Answer 6

A person’s next best alternative among all options in a particular transaction. Also known as: fallback option.

Question 7

Economic rent

Answer 7

A payment or other benefit received above and beyond what the individual would have received in his or her next best alternative (or reservation option).

Question 8

Isocost line

Answer 8

A line that represents all combinations that cost a given total amount.

Question 9

Innovation rent

Answer 9

Profits in excess of the opportunity cost of capital that an innovator gets by introducing a new technology, organisational form, or marketing strategy. Also known as: Schumpetarian rents.