Workbook13 Flashcards
Scrambled Eggs Doctrine
Jean Monnet’s theory that the nations of Europe would be disinclined to wage war over historical disagreements if their economies were interdependent.
Secondary Factor
Capital; i.e., production good. (See capital and factors of production)
Service
An intangible commodity, deed, or utility. (See economic good)
Sherman Antitrust Act
The 1890 law that makes monopolistic restraint of trade illegal. (See antitrust trilogy)
Shill
An agent of the seller
Short Run
In economics, the time it takes to change some, but not all, factors of production; i.e., when there are both fixed and variable inputs. (See long run and momentary period)
Shut-Down Point
Where total revenue (TR) equals variable cost (VC).
Special Theory of Employment
John Maynard Keynes’ sarcastic observation that the classical economists required the assumption of full employment in the models they designed to solve the problem of mass unemployment. (See general theory of employment)
Special Theory of Relativity
Albert Einstein’s assertion that the speed of light is absolute; but time, space, and mass are relative. As one consequence, E=mc squared, i.e., energy equals mass time the speed of light squared. (See general theory of relativity)
Stare Decisis
(Latin) The decision stands. The legal principle that a precedent decision is binding; that all future decisions must be in common with the previous decision
Statics
An analysis that considers a limited number of variables and time frames. (See dynamics)
Statistics
A precise analysis using numbers, 42.7 percent of which are made up on the spot
Subsidy
A unilateral transfer payment from the government to the business sector
Substitution Effect
When the price of a good is decreased and it thereby becomes an attractive alternative to another good previously purchased, and, as a result, the quantity demanded is increased. (See income effect and reverse substitution effect)
Substitution Good
When the use of one good precludes the use of another; i.e., they are mutually exclusive. (See complementary good, factor good, and interdependent markets)
Sufficient Condition
A guarantee of a specific outcome
Superior Good
A good that is bought in larger quantities as real income increases, or vice versa; i.e., a normal income effect. (See income effect and inferior good)
Supply Curve
A horizontal aggregation of marginal cost functions beyond the point of diminishing returns for all member firms in the market
Surplus Value
The difference between the labor value and the market price. (See labor theory of value)
Syllogism
An internally consistent hypothesis. The deductive logic of Aristotle commonly referred to as set theory
Tabular Rasa
(Latin) A clean slate. Without preconceived notion
Tariff
A tax on imports; i.e., a customs duty
Tautology
In logic, a statement that is necessarily true by virtue of its structure, as: Either you have an MBA, or you don’t
TBEL
To be explained later. What the professor says when asked about the meaning of life
Teacher
An underpaid talk show host, frequently tuned out by a portion of the audience, some of whom will be forced to watch reruns
Temporary Restraining Order
This order may be issued ex parte (without the defendant present) if the judge believes the alleged danger is immanent and potential damage irreparable.
Terms of Trade
The Ricardian name for market price. (See limits of trade)
Theoretical Framework
The boughs on which an author hangs the foliage of his thesis. Construction works on a break
Theory
In economics, a reasoned proposition derived from established assumptions which explains the past or predicts the future. (See fact)
Theory of Absolute Advantage
Hypothesis: that a division of labor- (leads to) specialization- (that leads to) increasing returns. States simplistically, “every individual and every nation should do what they do best.” (See productivity descriptions)
Theory of Bureaucratic Displacement
Max Gammon’s thesis that the more bureaucratic an organization, the greater the extent to which useless work tends to displace useful work. (See Parkinson’s Law)
Theory of the Firm
Alfred Marshall’s profit theory; i.e., an explanation of how a business maximizes profit.
Tie-in-Sales
A transaction whereby the initial sale (usually low-pried) requires an additional purchase of a related good or service only from the original seller; e.g., Polaroid cameras, video game systems, or home alarm systems
Total Cost
(TC): Fixed cost (FC) plus variable cost (VC).
Total Revenue
(TR) Price times quantity
Total Utility
(TU) The total satisfaction derived from all units consumed. (See marginal utility)
Transitive
Mathematically logical
Unilateral Transfer Payment
A payment for which there is no return good or service. (See entitlement, welfare, and subsidy)
Usury
The practice of charging an exorbitant or illegal rate of interest
Util
An introspective unit of satisfaction; i.e., quantitative measure of utility that reports one’s own feelings exclusively
Utility
The satisfaction derived from consuming a good or service
Utility Commission
A government agency, whose members, appointed by a governor, establish prices and service standards for natural monopolies such as water and power
Variable Cost
(VC) A cost that is zero at zero production and increases as production increases.
Vigorish
A transaction fee paid by a gambler to a bookie or a casino
Voter’s Paradox
When transitive individual preferences produce an intransitive collective outcome; e.g., voters prefer Adams to Bennett to Cooper, but Coopers gets elected. (See transitive and Arrow’s Impossibilities Theorem)
Wage-Fund Doctrine
David Ricardo’s theory that maximum wages require the optimal ratio (mix) of land, labor, and capital. John Stuart Mill explained that give this optimum, an attempt to increase wages would reduce the reward to the other factors, alter the ratio, produce less, and ultimately reduce wages; i.e., more is less
Water-Diamond Paradox
Adam Smith’s conundrum that asks why diamonds, a luxury, are worth more than water, which is essential to life
Wealth of Nations
(An Inquiry into the Nature and Causes of the…) Adam Smith’s magnum opus that debunks mercantilism and sets forth the principles of free trade using the Invisible Hand Doctrine as the theoretical framework. (See Invisible Hand Doctrine)
Weight Subtracting Theory
A business with an output that weighs significantly less than the raw materials used to manufacture it; e.g., a steel mill. (See location theory)
Weight-Adding Industry
A business with an output that is much larger or heavier than the parts used in its manufacture: e.g., an assembly plants or a brick factory. (See location theory)
Welfare
A unilateral transfer payment made to the household sector. (See unilateral transfer payment, entitlement, and subsidy)
Welfare Economics
The study of public policy from the perspective of consumer benefit
Welfare Effects
The ultimate impact of political, social, or economic behavior on price, quantity, average cost, excess profit, and ultimately, consumer surplus
Welfare Triangle
Vildredo Pareto’s description of consumer surplus. (See consumer surplus)
Widget
An undefined good or service
Work
Something people look for until they find a job
WTO
Called the GATT before 1955, the World Trade Organization promotes the reduction of trade restrictions among member nations
Zero-Sum Game
1: Any competitive activity where, regardless of the results, the group of participants, taken as a collective, is neither better off nor worse off, 2: A game in which someone gains only at another’s expense
