Economic Terms

A situation analysed using game theory that shows why two rational individuals might not cooperate, despite it being in their best interests to do so.The Nash Equilibrium in this game will always be for both players to betray each other despite the payoffs for both players being higher if they were willing to cooperate. This game is based on the idea of two prisoners who have committed a crime with an adverse feeling towards years in prison.

Below is a payoff matrix to illustrate the equilibrium concept of the game.

The costs or benefits experienced by buyers and sellers that are reflected in the market equilibrium position.

Private sector debt is the stock of liabilities held by the sectors non-financial corporations. This is comprised of personal loans, personal mortgages, business debts, and debts of the financial sector.

 

 

 

Is an investment company that makes investments in the equity of companies with funding raised by retail and institutional investors.

A good that is scarce because it is excludable (it is possible to exclude non-consumers from the benefit of a good or service) and rivalrous (the consumption of a good by one consumer diminishes the amount of the good available to other consumers).

A good that is scarce because it is excludable (it is possible to exclude non-consumers from the benefit of a good or service) and rivalrous (the consumption of a good by one consumer diminishes the amount of the good available to other consumers).

The equilibrium level of output if external costs/benefits experienced by third parties are not reflected in the market equilibrium.

The process by which a state owned enterprise would be sold to private and institutional investors e.g. Royal Mail.

The production of goods and services is influenced by the preferences of producers.

The benefit achieved by suppliers because the equilibrium price is higher than the price suppliers would be prepared to supply the goods at. This is always represented by the area above the supply curve and below the market price.