Economics Concepts Flashcards

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Ad valorem tax

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An indirect tax imposed on a good where the value of the tax is dependent on the value of the good.

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Asymmetric information

Back

Where one party has more information than the other, leading to market failure.

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Capital

Back

One of the four factors of production; goods which can be used in the production process.

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Capital goods

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Goods produced in order to aid production of consumer goods in the future.

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Ceteris paribus

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All other things remaining the same.

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Command economy

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All factors of production are allocated by the state, so they decide what, how and for whom to produce goods.

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Complementary goods

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Negative XED; if good B becomes more expensive, demand for good A falls.

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Consumer goods

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Goods bought and demanded by households and individuals.

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Consumer surplus

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The difference between the price the consumer is willing to pay and the price they actually pay.

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Cross elasticity of demand (XED)

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The responsiveness of demand for one good (A) to a change in price of another good (B). %change in QD of A/%change in P of B.