Economics, Strategy and Globalization Flashcards
Absolute advantage
an advantage a country has over other countries in the production of a good service
Business cycle
a fluctuation in aggregate economic output that lasts for several years
Results from technological changes, political events, or governmental monetary policy
Comparative advantage
an advantage a country has in producing a good or service because it has no alternative users of its resources that would involve a higher return
Consumption function
depicts the relationship between changes in personal disposable income and consumption
Cost leadeship
a strategy that involves focusing on reducing the costs and time to produce, sell and distribute a product or service
Demand
the quantity of a good or service that a consumer is willing and able to purchase at a given price
Deflation
the rate of decline in the price level of goods and services
Depression
a deep and long-lasting recession
Dumping
a form of predatory pricing in which a manufacturer in one country exports a product at a price that is lower than the priced charged in its home country
Economic profit
the amount of profit in excess of normal profit
Export subsidies
payments made by a government to encourage the production and export of specific products
Government budget surplus (deficit)
the excess (deficit) of government taxes in relation to government transfer payments and purchases
Inflation
the rate of increase in the price level of goods and services
marginal product
the additional output obtained from employing one additional unit of resource
marginal revenue
the additional revenue received from the sale of one additional unit of a product
marginal revenue product
the change in total revenue from employing one additional unit of a resource
market equilibrium
the price at which all the goods offered for sale will be sold
monopolistic competition
a market characterized by many firms selling a differentiated product or service.
nominal gross domestic product
the price of all goods and services produced by a domestic economy for a year at current market prices.
nominal interest rate
the interest rate in terms of the nation’s currency
normal profit
the amount of profit necessary to compensate the owners for their capital and/or managerial skills
oligopoly
a market characterized by significant barriers to entry. As a result there are few sellers of the product.
Personal disposable income
the amount of income that individuals received and have available to purchase goods and services
potential gross domestic product
the maximum amount of production that could take place in an economy without putting pressure on the general level of prices
price ceiling
a specified maximum price that may be charged for a good, usually established by a government. a price ceiling will cause good shortages
price floor
a specified minimum price that may be charged for a good, usually established by a government. A price floor will cause overproduction of the good
product differentiation
a strategy that involves modification of a product to make it more attractive to the target market or to differentiate it from competitors’ products.
pure competition
an industry in which there are a large number of sellers of virtually identical products or services. no individual seller is able to affect the market price
pure monopoly
a market in which there is a single seller of a product or service for which there are no close substitutes.
real gross domestic product
the price of all goods and services produced by a domestic economy at price level adjusted (constant) prices
real interest rate
the interest rate adjusted for inflation
recession
a period of negative gross domestic product growth
substitution effect
the fact that as price of a good or service falls, consumers will use it to replace similar goods or services
supply
the quantity of a good or service that will be supplied by producers at a give price
unemployment rate
the percentage of the total labor force that is unemployed at a given time
