Terms Flashcards
Total wealth
What you own minus what you owe - money that remains after the bills are paid.
Income
Money that flows in.
Debts
An amount of money that you owe.
Example of debts: Mortgage debt (usually on one’s home) Credit card debt Student Loans Auto Loans Bank Loans etc
Median income
When looking at a group of households or individuals, the median income is the income between the lowest and the highest, and by finding the median income, you can divide income distribution by how many households that are below median income and above.
Macroeconomics
Looks at the “larger picture”, focuses at a country’s national economy and looks at how things work in the business world - ex: unemployment etc.
Microeconomics.
Looks at the “smaller picture”, focuses on individual businesses - ex: pricing products, services etc and looks at the market etc.
Factors of production.
Resources used by businesses to produce goods and services. Different factors are: Land & natural resources, labour & capital goods (=human-made things that help produce other things) such as tools, machinery and buildings.
Supply
The total amount of a specific good or service that is available for the consumer.
Demand
A consumer’s desire and willingness to pay a price for a specific good or service.
Prices of goods and services
The money value of a unit of a good, service, or resource.
Inflation
The rate at which the general level of prices for goods and services is rising, and, subsequently, purchasing power is falling. Central banks attempt to stop severe inflation, along with severe deflation, in an attempt to keep the excessive growth of prices to a minimum.
Taxes
The money individuals and companies pay to the state, county or municipality. Ex: Kommunalskatt.
Homogeneous goods
Products that vie with each other in a market but which (from the consumer’s viewpoint) have little or no differentiation in terms of features, benefits, or quality and are, therefore, forced to compete on price or availability. Ex: oranges.
Monopolistic competition
The model of monopolistic competition describes a common market structure in which firms have many competitors, but each one sells a slightly different product. Example: Schampoo and conditioner.
Cartelization
To form a cartel i. e an organization created from a formal agreement between a group of producers of a good or service, to regulate supply in an effort to regulate or manipulate prices. One can distinguish private cartels from public cartels. In the public cartel a government is involved to enforce the cartel agreement, and the government’s sovereignty shields such cartels from legal actions. Inversely, private cartels are subject to legal liability under the antitrust laws now found in nearly every nation of the world. Furthermore, the purpose of private cartels is to benefit only those individuals who constitute it, public cartels, in theory, work to pass on benefits to the populace as a whole. Competition laws often forbid private cartels. Identifying and breaking up cartels is an important part of the competition policy in most countries, although proving the existence of a cartel is rarely easy, as firms are usually not so careless as to put collusion agreements on paper. Example: OPEC.
