Economics - a social science that studies how to achieve the optimal allocation of scarce resources to maximize the satisfaction of human needs.
Scarcity of resources - refers to the fact that the quantity of economic resources is always relatively insufficient in relation to the infinite diversity of human needs, and that there is a price to be paid for taking them.
Normative analysis - the study of what economic activity "ought to be" and how socioeconomic problems should be solved.
Empirical analysis - describes "what" economic phenomena are and how socioeconomic problems are actually solved.
Demand - the quantity of a good or service that consumers are willing and able to buy at a given price.
Change in demand - the change in the quantity demanded of a good caused by a change in the price of that good.
Change in the level of demand - the change in demand caused by other factors while the price of a good remains constant.
Law of demand - the relationship between the price of a commodity and the quantity demanded in the model direction of change.
Supply - the quantity of a good or service that a producer is willing and able to supply at a given time and at various possible price levels.
Law of supply - the price of a good is directly proportional to the quantity supplied.
Equilibrium price - the price at which the price demanded and the price supplied for a good coincide, i.e., the price at which the quantity demanded equals the quantity supplied.
Equilibrium quantity - the quantity supplied and demanded when the price demanded equals the price supplied is called the equilibrium quantity.
Price elasticity of demand - in other conditions remain unchanged, the price of a commodity or labor change due to its own demand for the degree of change.
Cross-price elasticity of demand - all other things being equal, the extent to which a change in the price of a good or service causes a change in the quantity demanded of another good or service.
Income elasticity of demand - the extent to which a change in consumer income causes a change in the quantity demanded of a good or service, other things being equal.
Cobweb model - a dynamic analytical theory that uses the principle of elasticity to explain the different fluctuations that occur when certain goods with long production cycles are out of equilibrium.
Cobweb stability condition - elasticity of supply equals elasticity of demand, and changes in market prices have the same effect on the quantity supplied and the quantity demanded
Utility - the ability of a good or service to satisfy a consumer's needs or desires.
Marginal utility - the increase or decrease in total utility caused by each unit increase or decrease in consumption of a good.
Consumer surplus - the difference between the price consumers are willing to pay for a good or service and the price they actually pay.
Consumer preferences - important subjective psychological factors that influence and constrain consumer behavior.
Consumer equilibrium - the state in which the total utility that can be
obtained by a certain number of consumers selling a variety of goods is maximized for a given income and at a given price.
Nondifferentiable curve - a trajectory of points used to represent all combinations of two goods for which consumers have the same preferences.
Marginal rate of substitution - the amount of another good that a consumer would have to give up if he or she increased the quantity of one good consumed by one unit
while maintaining a constant level of utility.
Engel's coefficient - the share of food consumption expenditures in total expenditures.
Price-consumption curve - the curve formed by the trajectory connecting the equilibrium points where all consumers maximize their utility.
Income-consumption curve - the trajectory of the change in the consumer's equilibrium
point caused by a change in income, holding consumer preferences and the price of goods constant.
Income effect - the change in the level of real income induced by a change in the price of a good, and hence the change in the quantity demanded of the good induced by a change in the level of
real income.
Substitution effect - the change in the relative price of a good caused by a change in the price of the good, and hence the change in the quantity demanded of the good caused by the change in the relative price of the good
.
Giffen goods - special low-grade goods whose quantity demanded moves in the same direction as price.
Climbing effect - the more typical positive cascading externalities, a fashionable consumer preference to own a good that
other consumers already own.
Vanity effect - more typically associated with negative externalities, a consumer preference to own a good that only a few people can enjoy or that is unique
.
Retained Wage -
Lorenz Curve - a curve that represents the percentage of social wealth on the vertical axis, and on the horizontal axis arranges all of the population from low to high income
from left to right, and accumulates the percentage of social wealth owned by each percentage of the population. The percentage of social wealth owned by each percentage of the population is accumulated and the corresponding points are connected
to a curve.
Gini coefficient - is an indicator used to evaluate the degree of equality in income distribution, is the degree of equality in economic and social income distribution has
measurable and comparable. It is the ratio of the area between the absolute parity line OY and the Lorenz curve to the area below the absolute parity line.
G=A/(A+B)
Human capital - refers to the ability or skill that people acquire at a certain cost and have a price in the labor market.
Opportunity cost - the maximum amount of other possible income that a producer gives up when he uses a certain resource to obtain a certain income. Or
The maximum value created by other activities performed by human capital.
On-the-job training - an important form of investment in human capital, re-education activities for all types of people who already have a certain educational background and are already engaged in
paid labor in the workplace.
General training - the technical knowledge and skills of employees after training and can be used in the original manufacturer, and can be used in other manufacturers
Specialized training - the technical knowledge and skills of employees after training can only be used in the original manufacturer.
Lifecycle Savings Motivation - The motivation for people to save comes from an understanding of the lifecycle, and usually people prefer to allocate their income
evenly over all periods. Saving in order to be able to spend in retirement.
Bell-shaped income curve - a curve formed when a person's income is below average in adolescence and old age and above
average in middle age, with income as the vertical axis and age as the horizontal axis.
Permanent Income Theory --
Targeted Savings --
Certain Prospects --
Uncertain Prospects --
Law of diminishing marginal returns - After successive increases in the inputs of a factor of production to a
consistent level of technology, the incremental increase in total output and marginal output will be diminishing.
Equivalent yield line - the trajectory of all the different combinations of two factor inputs that produce the same output at a constant level of technology
.
Marginal rate of technological substitution - the proportion of one input factor that substitutes for another on an equal output line at a constant level of technology
.
Output elasticity - the relative change in output caused by a relative change in the quantity of one
input if other inputs are fixed and the quantity of that input alone is changed, given a constant level of technology and input prices.
Productivity elasticity - the relative change in output when all input factors change at a uniform rate
, given constant levels of technology and input prices.
Elasticity of substitution - the relative change in inputs caused by the relative change in the marginal rate of technical substitution, given a constant level of technology and input prices
.
Rewards of scale - the change in output when all of a manufacturer's input factors are varied according to a uniform ratio
Example, given a constant level of technology and factor prices.
Production function - the relationship between the quantities of the various factors of production used in production
and the maximum output that can be produced in a given period of time, given a constant level of technology.
Technological Progress and Types - the process by which all factors that enable a given combination of inputs to produce more output **** act together
. Classified as capital-using technological progress, labor-using technological progress, and neutral technological progress.
Cost - the price of a factor of production used by a manufacturer to carry out a productive activity or the payment or
compensation that the owner of the factor of production must receive.
Implicit cost - compensation payable to the vendor's own factors of production that is not actually paid.
Incremental costs - the associated costs incurred as a result of a production decision, i.e. the incremental increase in total costs.
Economic profit - also known as superprofit, the balance of the vendor's total revenue from the sale of a product minus the cost of production at opportunity cost
.
Learning curve - also known as the progress function, a curve used to reflect the change in costs
as average costs decrease as cumulative production increases.
Production economic zone - the curve that connects the points of input combinations that respectively represent factor inputs with marginal yields equal to zero on the way to equal production
is the ridge, and the area between the ridges is the production economic zone.
Economies of scale - the tendency for average costs to fall gradually as the scale of production increases.
Economies of scope - the combined output of multi-product firms exceeds the sum of the output of single-product firms. That is, joint output exceeds the sum of separate
individual outputs.
Cost elasticity - the relative change in total cost
caused by the relative change in total output along the line of expansion, given a constant level of technology and price.
Enterprise - a long-existing form of economic organization, an economic
unit that engages in production and marketing activities in order to make a profit. An alternative to the price mechanism, an organization that replaces the market in the allocation of resources.
Transaction costs - costs expended in order to exchange activities.
Innovation - the establishment of a new production function, or the introduction of a new combination of factors of production into the
production system through the activity of entrepreneurs.
Profit maximization -
Cash - deposits of cash on hand in a business that are readily available for payment, and cash equivalents, specifically cash on hand
, bank deposits, other monetary funds, and cash equivalents.
Cash equivalents - investments held by a business that are short-term, highly liquid, easily convertible to known amounts of cash, and subject to little risk of change in value
.
Income Statement -
Statement of Cash Flows - a statement prepared on the basis of cash that reflects the inflows and outflows of cash to and from a business during a given accounting period, and that demonstrates
the ability of a business to obtain cash and cash equivalents.
Principal-agent problem - refers to the fact that both the principal and the agent seek to maximize their own utility, and that the utility-maximizing
objectives of the two are often inconsistent. Manifested by moral hazard, maximizing sales revenue, and high on-the-job spending. Is due to information
Information asymmetry, uncertainty, incomplete contracts.
Principal-agent theory - a theory that arises in response to the principal-agent problem shown to exist in the modern business system.
Information asymmetry - a situation in which some participants in a contractual relationship have information that others do not.
Incomplete contract - refers to a contract that does not accurately describe all possible future states associated with the transaction and the obligations of the parties to the contract in
each state.
Residual Claim - a claim to the remaining income of a firm's earnings after the payment of factor compensation and input prices.
Market - a group of vendors and individuals who associate with each other for the purpose of buying and selling a good, or a "place" where prices for the same good are formed by the action of supply and demand
.
Market structure - the degree of competition in a market for a particular good or service, which is influenced by the number of firms
and the degree of product differentiation.
Perfect competition - pure competition, a market situation in which there are no monopolistic elements, a market
structure that is free from any barriers or interference.
Stopping point - the point at which the market price is the intersection of MC and AVC, where only variable costs can be recovered, is the stopping point.
Manufacturer's short-run supply curve - the portion of the MC curve that lies above the minimum of the AVC curve in a perfectly competitive market.
Average revenue - the monetary income a vendor receives from each unit of a good after selling a certain quantity of the good.
Marginal Returns - the value of the increase in total returns from each additional unit of the good sold by the vendor.
Marginal material product - the increase in total output when one unit of factor is added at the end
with the technology of production and the number of other factors of production remaining unchanged. mpp
Marginal product value - the increase in total output when one unit of factor is added at the end
. increase in the sales value of the marginal material product when one unit of factor is added.VMP=P.MPP
Marginal factor cost - the increase in the total cost of the manufacturer caused by the last addition of one unit of variable factor.
General equilibrium - a state in which all markets reach equilibrium at the same time.
Pareto optimum - the state in which any allocation of productive resources that no longer makes it possible for any one person to be better off and make another
worse off has maximized the utility of the aggregate.
Monopoly - exclusivity, a market structure in which the market is under the complete control of a single vendor and there is only one supplier in the market
Monopolistic competition - product differences between vendors, where competitive and monopolistic factors coexist, and where the competitive factors dominate the market structure
Market structure.
Natural monopoly - certain products require large investments in fixed equipment, significant economies of scale, and become a natural monopoly.
Cost of goods sold -
Rent-seeking - the activity of seeking and maintaining pre-existing rents by seeking or maintaining a monopoly position in an industry.
Oligopoly - Oligopoly. A market structure in which monopoly and competitive factors coexist and are dominated by monopoly factors. The market
There are a few monopolistic players in the marketplace that engage in intense competition.
Gounod equilibrium - The point at which the response curves of the firms in a two-headed market intersect is known as the Gounod equilibrium, where each firm realizes its own maximally profitable output given the output of its competitive
rivals, and at which point there is no impulse on the part of either firm to change its output.
Price leadership - prices in an industry are usually set first by one vendor, with other vendors following in pricing or changing prices.
Cartel - In an oligopolistic market, if a small number of firms enter into
an open joint agreement to co-ordinate the allocation of market shares, to determine the price
or terms of the products to be sold, to control the quantity and quality of exports, to share in the profits or revenues, to exchange technology, trademarks, or patents, etc.
Cartel is the most common form of monopoly.
Differential pricing - price discrimination, whereby a manufacturer takes different prices
from different purchasers for the same product at the same time, or sells the same product at a price that is not
proportionate to its marginal cost, taking full account of variations in production, distribution, and risk.
The skimming method - a short-term pricing strategy that employs a high price at the outset in order to skim the oil floating on the surface first.
Cost-plus pricing - the price set should cover the cost of obtaining or producing the product, plus a profit sufficient to enable the business to make a target
rate of return.
Basic model of competition - consists of the following three components: rational, self-interest-maximizing consumers; rational
, profit-maximizing firms; and a perfectly competitive market.
Market Failure - In the real economic operation, the market mechanism shows many defects that are difficult to overcome by itself, and the market economy does not
have to achieve the operation state of economic efficiency.
Externality - when the behavior of a vendor or an individual directly affects others without being compensated or given payment
Temporal externality - the additional benefit or loss that a certain economic activity in the present may cause in future periods or loss.
Spatial externality - the additional benefit or loss that an economic activity causes to the surrounding economic agents in a given space.
Monetary externality - an externality that can be reflected in market prices.
Technological externality - an externality that cannot be captured through market prices.
Coase's theorem - if property rights are clearly defined and the transaction costs of negotiation are zero, then whichever
party initially owns the property rights will lead to an efficient allocation of resources.
Public ****goods - products that are noncompetitive and nonexclusive and cannot rely on market forces to achieve efficient allocation, with extreme
end positive externalities.
Quasi-public **** goods - non-competitive to some extent, but can be exclusive, such as firefighting, health care, and transportation.
Public **** resources - goods that are competitive and non-excludable.
Public Goods - goods that are mandatorily consumed by the government, e.g., compulsory education.
Public nuisance goods - goods whose consumption is prohibited by the government, such as drugs.
Pollution license trading - a means for the government to deal with the externalities caused by pollution, so that manufacturers have a license to discharge,
but the license can be traded.