Economic Terms

These are typically goods that have the feel of public goods but do not completely satisfy the definition of a public good. They are largely non-rival (apart from during peak/times and periods) and although it is possible to exclude third parties from the benefits the costs associated with this mean that this is rarely enforced. e.g. roads and NHS.

Below is a digram to illustrate that for a public good to be classed as non-pure there must be one characteristic of a public good that does not hold. Below are examples of two goods toll roads and a popular beach. A toll road is non-rival as there is plenty of room for cars on these types of roads consumptin of this type of good has little or no effect on the amount left for others to consume. But of course this good is excludable because unless a person wishes to pay the toll to use the road they cannot enojy the good i.e. this is not a good that people can free-ride off. On the other hand a popular beach is non-excludable as it is free to use a beach, but is a rivalled good as the more people that use the beach the less space there is for the next consumer on that beach.

These are typically goods that have the feel of pur public goods but do not completely satisfy the definition. They are largely non-rival (apart from during peak/times and periods) and although it is possible to exclude third parties from the benefits the costs associated with this mean that this is rarely enforced. e.g. roads and NHS.

Below is a digram to illustrate that for a public good to be classed as non-pure there must be one characteristic of a public good that does not hold. Below are examples of two goods toll roads and a popular beach. A toll road is non-rival as there is plenty of room for cars on these types of roads consumptin of this type of good has little or no effect on the amount left for others to consume. But of course this good is excludable because unless a person wishes to pay the toll to use the road they cannot enojy the good i.e. this is not a good that people can free-ride off. On the other hand a popular beach is non-excludable as it is free to use a beach, but is a rivalled good as the more people that use the beach the less space there is for the next consumer on that beach.

A resource that cannot be replaced after it has been used e.g. oil and gold.

Goods that can only be consumed on a single occasion and cannot be repeatedly used e.g. food or drink.

Is when a counterparty in a financial transaction fails to meet the obligations set aside in a loan contract by failing to pay the principal of the loan or the accompanying interest payments. NPLs are norally an indicator of how badly the bank is performing and therefore how exposed to risks and losses it is. However, what is classed as an NPL greatly depends on the location of the bank used. According to the BASLE Capital Accord “A loan is nonperforming when payments of interest and principal are past due by 90 days or more."

This is when firms engage in efforts other than reducing prices to attract consumers. This is because normally firms in an oligopoly face a kinked-demand curve, in which reducing prices will not allow oligopolists to capture the entire market. Therefore by distinguishing their product from rival's they will be able to set the profit maximising price without the fear of retaliation from rivals.

Below is an expample of how the chocolate maker Cadbury's tries to distinguish itself from a heavily saturated market without becoming embroiled in a destructive price war. It has a three-tiered system where the products must be visually and functinally different from other chocolate bars on the market As well as an alternative form of branding and service provision.

The full employment level of real output identified by the position of the vertical LRAS curve.

Below is a diagram to ilustrate this point for an economy. This is the point at which an economy is on track to achieve its potential growth as all resources in the economy are being utilised.

 

The demand for this type of good increases as income rises. The opposite of an inferior good.

Below is a diagram to show the demand curve for a normal good and how the demand curve changes to changes in income. If the real income increases this causes the demand for normal goods to rise, this is because consumers have a large amount of income to buy the goods that they wish to purchase. A decrease in real income will cause the demand curve to shift in as consumers have to switch to inferior goods as their ability to purchase normal goods is reduced.

The demand for this type of good increases as income rises. The opposite of an inferior good.

Below is a diagram to show the demand curve for a normal good and how the demand curve changes to changes in income. If the real income increases this causes the demand for normal goods to rise, this is because consumers have a large amount of income to buy the goods that they wish to purchase. A decrease in real income will cause the demand curve to shift in as consumers have to switch to inferior goods as their ability to purchase normal goods is reduced.

When the difference between a firm's total revenue and total cost is equal to zero. Therefore, this is the minimum level of profit needed for a company to remain competitive in the market.

The diagram below shows how an individual firm breaks even by charging a price equal to their average cost of production and therefore firm's do not get to enjoy any supernormal profit.