Chapter 2 - Tech.change, Pop. And Economic growth

Question 1

Equilibrium

Answer 1

A situation that is self perpetuating. Where D = S.

Question 2

Ceteris Paribus

Answer 2

“Other things being equal”

Question 3

Relative Prices

Answer 3

The price of one good relative to another.

Question 4

Incentives

Answer 4

Economic benefits or punishments which influence the costs and benefits of alternative courses of action.

Question 5

Diminishing Average Product Of Labour

Answer 5

As more labour is used in a given production process, the average product of that labour typically falls.

Question 6

Reservation Option

Answer 6

A person’s next best alternative to a particular transaction.

Question 7

Economic Rent

Answer 7

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

Question 8

Isocost Line

Answer 8

A line of all the points of which indicate combinations of inputs that cost a given total amount.

With two inputs it is negatively sloped: the more of one you buy, the less of the other you can afford if your budge is fixed.

Question 9

Innovation Rents (Or Schumpeterian rents)

Answer 9

Profits in excess of economic profits than an innovator gets by introducing a new technology, organisational form or marketing strategy.