Personal Finance Glossary Flashcards
Risk
anything that affects the outcome of your choices that can associated with a probability
Oligopoly
a market characterized by a small number of firms who realize they are interdependent in their pricing and output policies
Specialization
individuals dividing up labor within/across trades
Assumptions
an abstraction that simplifies a scenario
Flat Money
items not valuable as a commodity but function as money because a government states that they are usable for debts
Unjust outcomes
unfair outcomes due to inequality of the implementation of rules
Assumptions
an abstraction that simplifies a scenario
Price of related goods
a variable that is impacted by complements and substitutes (related goods)
Normal Goods
any good in which demand increases as income increases
Marginal Cost
why the supply line slopes up; inverse relationship with marginal productivity
Graphs
Returns to scale
degree to which a change in the scale of production changes the level of output (decreasing, constant, increasing)
Rent-seeking
preventing a loss in market power
Consumption
the act of deriving utility (sometimes using things, but only with goods)
Negative externalities
activity that imposes negative effects (e.g. pollution); market failure results from a private actor not taking all costs into effect
Constrained Optimization Problem
a situation where one maximizes utility in the face of scarcity
Commutative justice
fairness of the rules by which the “market game” is played
Commodity money
items that function as money but are also valuable themselves
Fiat money
items not valuable as a commodity but function as money because a government states that they are usable for debts
Factor markets
the exchange of inputs we produce
Product markets
the exchange of goods and services
