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Economic Terms

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Veblen good

A good that enjoys “snob appeal” i.e. the goods become more attractive as price rises because few people can afford to buy the goods e.g. designer goods. This only applies to small high net worth (HNW) market segments with branded goods and is unlikely to be found in a perfectly competitive market.

Below is a diagram to illustrate the good's demand curve. In this instance the curve has a positive slope and therefore is upward sloping due to the positive relationship between the two variables: price and quantity demanded. It is extremely rare for a good to have this positive relationship between price and quantity demanded and in most cases is just an empirical theory rather than a form of reality. But an example of this type of good in the real world is basic food staples in times of economic crises. The idea is that if an individual/family is struggling financially and the price of the basic food essentials increase, these individuals end up purchasing more of this essential food item as they can't afford more expensive food items in its place despite the price of the essential good.

Vertical Integration

This is where firms decide to merge when they are both operating at different stages of the production processes. This most commonly occurs when a company merges with an important supplier.

Below is a diagram to show this type of integration occurs when firms from different sectors such as the primary,secondary or tertiary sector merge with another to have one firm that has a complete production process of a good. However, there are two different forms of this type of integration. Vertical Forward Integration involves a supplier merging with one of its buyers such as a newspaper buying up a newsagents. Vertical Backward Integration involves a purchaser buying one of its suppliers such as a car manufacturer buying up a tyre company.

Visible trade

Trade in goods i.e. tangible and therefore visible items.

Volume economies

Increasing the dimensions of any structure will lead to a proportionately larger increase in capacity. e.g. a increasing the size of a box from 2m sides to 4m sides will increase the surface area by a factor of 4 (material cost) while the capacity increases by a factor of 8.

Voluntary unemployment

Workers who have decided not to work, usually because the prevailing wage rate does not incentivise them to work.


The reward for providing labour.


The desires that encourage the consumption of goods and services.


The amount of assets, valuable items and resources owned by an individual, firm or any country or group. Wealth is usually applied to generate an income for the owners.

Below highglights some of the basic features of wealth. For instance wealth is the accumlation of value of assets and as a result very little of a person's wealth is spent, with the main reason being because it is less liquid and primarily income is used for day to day transactions.

Wealth effect

Any change in consumption that occurs due to an increase in personal wealth e.g. if the value of the stock market doubles this should encourage households to increase consumption.

Wealth of Nations

A famous economics book written by Adam Smith, widely renowned as one of the founding fathers of modern economics. the book considered the nature and causes of wealth and aspects of production and free markets.

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