Book Definitions

Question 1

Endemic - adjective

Answer 1

Regularly found among particular people or in a certain area

Question 2

Endemic Advertising

Answer 2

Endemic advertising refers to ad placement where it is native or natural to its market

Question 3

ubiquitous - adjective

Answer 3

present, appearing or found everywhere

Question 4

Prisoner Dilemma

Answer 4

The prisoner’s dilemma is a paradox in decision analysis in which two individuals acting in their own self-interest pursue a course of action that does not result in the ideal outcome.

Question 5

Paradox - noun

Answer 5

seemingly absurd or self-contradictory statement or proposition that when investigated or explained may prove to be well founded or true. Synonyms: contradiction

Question 6

Invisible Hand Theory

Answer 6

The term “invisible hand” is a metaphor for how, in a free market economy, self-interested individuals operate through a system of mutual interdependence to promote the general benefit of society at large. It was introduced by Scottish enlightenment thinker Adam Smith in his book “An Inquiry into the Nature and Causes of the Wealth of Nations” (1776)

Question 7

Game Theory

Answer 7

Game theory is the study of human conflict and cooperation within a competitive situation. In some respects, game theory is the science of strategy, or at least the optimal decision-making of independent and competing actors in a strategic setting. The key pioneers of game theory were mathematicians John von Neumann and John Nash, as well as economist Oskar Morgenstern.

Question 8

Rational Irrationality

Answer 8

he term refers to someone who makes a seemingly reasoned assessment based on unreasonable evidence. When a person believes in something and thinks the belief is rational despite a preponderance of evidence to the contrary, you arrive at that the concept of rational irrationality.

Question 9

Utopian

Answer 9

utopia - noun - an imagined place or state of things in which everything is perfect Utopian - adjective - modeled on or aiming for a state in which everything is perfect; idealistic.

Question 10

Huard Instinct

Answer 10

a mentality characterized by a lack of individual decision-making or thoughtfulness causing people to think and act in the same as the majority of those around them. In finance, a heard instinct relates to instances in which individuals gravitate to the same or similar investments based almost solely on the fact that many others are investing in those stocks.

Question 11

tenet

Answer 11

a principle or belief, especially one of the main principles of a religion or philosophy.

Question 12

Free Market

Answer 12

an idealized system in which the prices for goods and services are determined by the open market and consumers, in which the laws and forces of supply and demand are free from any intervention by a government, price-setting monopoly, or other authority.

Question 13

Market Types

Answer 13

Goods Market - Buying and selling of goods and services Money Market - interaction between demand for money and supply of money. Financial market - any marketplace where trading of securities including equities, bonds, currencies and derivatives.

Question 14

efficacy - noun

Answer 14

the ability to produce a desired or intend result. Synonyms: effectiveness, success, productiveness

Question 15

Positive/Negative Feedback loops

Answer 15

Positive feedback loops enhance or amplify changes; this tends to move a system away from its equilibrium state and make it more unstable. Negative feedbacks tend to dampen or buffer changes; this tends to hold a system to some equilibrium state making it more stable

Question 16

laissez faire

Answer 16

a policy or attitude of letting things take their own course, without interfering. Economics: abstention by governments from interfering in the workings of the free market.

Question 17

perfect competition

Answer 17

the situation prevailing in a market in which buyers and sellers are so numerous and well informed that all elements of monopoly are absent and the market price of a commodity is beyond the control of individual buyers and sellers.

Question 18

sovereign debt - noun

Answer 18

the amount of money that a country’s government has borrowed, typically issued as bonds denominated in a reserve currency.

Question 19

benevolence

Answer 19

the quality of being well meaning; kindness.

Question 20

self fulfilling prophecy

Answer 20

s a prediction that directly or indirectly causes itself to become true, by the very terms of the prophecy itself, due to positive feedback between belief and behavior.

Question 21

objectively - adverb

Answer 21

in a way that is not influenced by personal feelings or opinions.

Question 22

general equilibrium theory

Answer 22

general equilibrium theory attempts to explain behavior of supply, demand, and prices in a whole economy with several or many interacting markets, by seeking to prove that interaction of demand and supply will result in overall general equilibrium.,

Question 23

maximum utility

Answer 23

when making a purchase decision, a consumer attempts to get the greatest value possible from expenditure of least amount of money. His or her objective is to maximize the total value derived from the available money.

Question 24

Utility

Answer 24

the total satisfaction received from consuming a good or service. The economic utility of a good or service is important to understand because it will directly influence the demand, and therefore price, of that good or service. A consumer’s utility is hard to measure, however, but it can be determined indirectly with consumer behavior theories, which assume that consumers will strive to maximize their utility.

Question 25

opportunity cost

Answer 25

the loss of potential gain from other alternatives when one alternative is chosen.

Question 26

Pareto efficient

Answer 26

a Pareto Optimal outcome cannot be improved upon without hurting at least one player

Question 27

Nash Equilibrium

Answer 27

a concept of game theory where the optimal outcome of a game is one where no player has an incentive to deviate from his chosen strategy after considering an opponent’s choice. Overall, an individual can receive no incremental benefit from changing actions, assuming other players remain constant in their strategies. A game may have multiple Nash Equilibria or none at all.

Question 28

economies of scale

Answer 28

a proportionate saving in costs gained by an increased level of production.