BSB113 Definitions

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Management and Human Resources
All Professors

Definitions - Economics Homo Economicus - Everyone wants more material wealth Creative Destruction - out with the old and in with the new Factors of Production - items used to produce goods and service Transfer - change in ownership Scarcity - limited resources for unlimited wants Opportunity Cost - value of the next best alternative Budget Constraint - the set of possible choices QUALY - quality adjusted life years Cost Effective Policy - policy that minimises the cost of obtaining a given desirable outcome Cost Benefit Analysis - an analysis of all the benefits of a choice as well as the opportunity costs involved in making that choice Effective Marginal Tax Rate - increase in taxes and the decrease in side payments (benefits) Progressive Tax - when the average tax increases with pre-tax revenue, the tax is progressive Regressive Tax - when average tax decreases with pre-tax revenue Poverty Trap - when someone with few skills earns more out of work than at work Defined Contribution System - a superannuation system whereby the sum you get at the end is determined by how much you contributed Benefit System - a superannuation system whereby the sum you get at the end is determined by an administrative rule not determined by your contribution Price Taking - buyers and sellers cannot influence the price, they can only decide whether to buy or to sell a good at a given market price Perfect Competition - a situation where everyone are price takers because there is many buyers and many sellers and everyone has perfect competition Willingness to Pay - the maximum price at which a buyer would purchase a unit of goods Demand Curve - a curve given by the willingness to pay The law of demand - the higher the price the less units consumers demand of a good Complements - goods that go well together, a price decrease for one good increases the demand for another good Substitutes - goods that compete with each other, a price decrease for one good decreases the demand for another good Ceteris Paribus - hold everything else constant Elastic Demand - the percentage change in quantity demanded is larger than the percentage change in the price Market Demand - the sum of individual demands of many customers Inputs - all factors used for production (land, capital, labour) Final Consumption Goods - goods produced for immediate consumption by consumers Intermediate Goods - goods that are inputs in another production process Complements in Production - factors that both have to be increased to increase production of an output Substitutes in Production - factors that can replace each other to produce a certain quantity of output Fixed Cost - cost that is independent of the quantity produced Variable Cost - cost that changes with the quantity produced Marginal Cost - cost to produce one additional unit equals the change in the total cost when output is increased by one unit Profit Maximisation - the quantity is chosen such that the price is equal to the marginal cost Supply Curve - quantity that a firm supplies to the market at a given price Market Supply - sum of the supplies of all firms active on a market Market Clearing Price - the price at which market demand equals market supply Market Equilibrium - a situation where neither buyers nor sellers want to change their behaviour Excess Demand - demand is larger than supply, usually because price is too low. Excess Supply - supply in a market is larger than demand, usually the price is too high Pareto Efficiency - an allocation is pareto efficient if no member of a society can be made better off without making at least one member worse off Self Sufficiency - where an economic unit (person, village) consumes only what it produces itself. Production Possibilities - the combination of goods that can be produced given the resources an economic unit has available Consumption Possibilities - the set of possible combinations of goods an economic unit can choose the goods it wants to consume from Consumer Surplus - the benefit that consumers derive from market interaction Producer Surplus - the benefit that all
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