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Definition
| Period of time when at least one factor of production is fixed. |
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Definition
| Period when all the factors of production are variable |
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Definition
An input factor that cannot be cannot be increased in supply within a given time period (short run)
eg. a factory, a power plant |
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Definition
an input factor that can be increased in supply within a given time period (long run)
eg. number of workers, electricity |
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Term
| Law of diminishing returns |
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Definition
| When one or more factors are fixed, there will be a point at which the additional production units (of the variable factor) will fail to produce more goods (i.e. the number of goods will diminish) |
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Term
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Definition
| When consumers are relatively unresponsive to changes in price. This is usually for necessities such as insulin for diabetics. |
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| Products that benefit the society and create positive externalities and spillovers. This holds true for vaccines. |
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Definition
| When a market cannot achieve the resources at the socially optimal point (the equilbrium). |
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| The amount of goods a company can produce in a given period of time. |
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| A maximum price set by the government. This induces the firms to lower their prices in order to make them accessible for consumers. |
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Definition
| The amount of goods demanded in a particular range of time. |
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| Marginal Private Benefit (MPB) |
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Definition
| The benefits enjoyed by certain private individuals for a particular good. |
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Definition
| Costs or factors which make it difficult for new starting firms to enter a dominant market. |
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| Income Elasticity of Demand (YED) |
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Definition
| Responsiveness to a certain product according to their income. |
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Term
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Definition
| The effect on uninvolved third parties: could be positive or negative. |
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