Econ Vocab Flashcards
Absolute Advantage
when a country is able to produce more output than other countries using the same input of factors of production
Absolute Poverty
measured in terms of the basic need for survival. It is the amount of income a person needs to have in order to stay alive.
Actual Growth
When previously unemployed factors of production are brought in to use. Represented by a movement from a point within a PPC to a new point nearer to the PPC.
Adverse Selection
When a buyer and seller do not have the same information, causing a transaction to take place based upon uneven terms.
Aggregate Demand
The total spending in an economy consisting of consumption, investment, government expenditure and net exports.
Aggregate Demand Curve
A curve showing the relationship between the average price level and real GDP.
Aggregate Supply (AS)
The amount of domestic goods and services supplied by businesses and the government, including both consumer goods and capital goods.
Allocative Efficiency
The level of output where marginal cost is equal to average revenue. The firm sells the last unit it produces at the amount that it cost to make it. The social optimum level of output.
Allocative Inefficiency
This occurs where the marginal social cost of producing a good is not equal to the marginal social benefit of the good to society. In different words, it occurs where the marginal cost of producing a good (including any external costs) is not equal to the price that is charged to consumers.
Anchoring
Anchors are mental reference points , relating to ideas or values, which are used to make decisions. Value is often set by anchors or imprints in our minds that we then use as mental reference points when making decisions. When an idea or a value is firmly anchored in a person’s mind, it can lead to automatic decisions and behaviors.
