PROFIT
A surplus of revenue from the sale of outputs over the costs of their production.
LOSS
A situation of generating revenue less than cost of production.
ABNORMAL PROFIT
The surplus of revenue over costs enjoyed by a monopoly that is in excess of profit the same firm could expect to earn if it faced competition for its market.
NORMAL PROFIT
A level of profit which allows the producer to continue producing.
PROFIT MAXIMIZATION
This is the aim of most private sector organizations, to increase to the greatest possible extent the surplus of revenue over costs.
BROKER
A share dealer, able to buy and sell shares on a stock exchange.
BEAR
A stock market speculator who will buys shares in the hope they will quickly fall in value so they can buy them back at a lower price. A bear market refers to a situation in which the average prices of shares on the stock market is falling.
BULL
The name given to a stock market speculator who buys shares in the hope their price will rise quickly so they can sell them for a profit. A bull market refers to a situation in which the average prices of shares on the stock market is rising.
STAG
A stock market speculator who applies for new issues of shares in anticipation of a rise in price when stock market trading commences in order to make a quick profit on resale.
DIVIDEND
A portion of the profit of a company that is paid to its shareholders for each share they own.
BOND
A debt investment with a fixed time period and rate of interest issued by a government or company to sell to investors in order to raise money.
BUDGET
The budget of a government is a forecast or plan of its intended tax revenues and expenditures in a financial year.
BUDGET DEFICIT
This financial situation occurs if a government plans to spend more than it forecasts to earn in tax revenues over the financial year. An actual budget deficit occurs if actual public spending exceeds actual tax revenues.
BUDGET SURPLUS
This financial situation occurs if a government plans to spend more than it forecasts to earn in tax revenues over the financial year. An actual budget deficit occurs if actual tax revenues exceed actual public spending.
EXTERNAL BENEFIT
A benefit arising from a positive externality, such as disease prevention due to vaccinations, enjoyed at no cost by other people or organizations due to actions or decisions taken by others.
EXTERNAL COST
A cost arising from a negative externality, such as pollution, that is incurred by other people or organizations and not by those responsible for the action or decision that caused it.
AVERAGE COST
The cost per unit of output, calculated by dividing the total cost of a given level of output by that total volume of output.
FIXED COST
A cost of production that does not vary with the level of output in a firm.
VARIABLE COST
A cost of production that varies directly with the level of output in a firm.
SOCIAL COST
The total cost to society of an activity, including both its private and external costs.
OPPORTUNITY COST
The benefit foregone by giving up the next best alternative use of scarce resources.
PRIVATE COST
A financial cost, such as the purchase of a new computer, incurred by the person or firm responsible for the action or decision that caused it.
PRIVATE BENEFIT
A financial benefit, such as sales revenue, enjoyed by the person or firm responsible for the action or decision that created it.
PRICE ELASTIC
Consumer demand for a product is described as price elastic if a small change in its price causes a larger proportionate demand response.
PRICE INELASTIC
Consumer demand for a product is described as price inelastic if a small change in its price causes a less than proportionate demand response.
PRICE ELASTICITY OF DEMAND
The responsiveness of consumer demand for a product to a change in its price.
PRICE ELASTICITY OF SUPPLY
The responsiveness of producer supply of a product to a change in its price.
PRICE WAR
Deep cuts in prices between a small group of large competing firms continually trying to undercut each other to attract customers from their rivals.
PRICE COLLUSION
A group of firms acting together to determine or influence the market price of their product through their joint control over market supply.
PRICE COMPETITION
Rivalry between firms supplying the same market based on reducing prices or offering discounts for customers.
NON-PRICE COMPETITION
Rivalry between firms supplying the same market through advertising and product differentiation strategies.
PRICE MECHANISM
The market mechanism that guides decisions taken by different producers and consumers about how scarce resources should be allocated between competing uses.
EMPLOYMENT
A situation in which people have regularly paying jobs
UNEMPLOYMENT
A situation in which people have no jobs
FULL-TIME EMPLOYMENT
A contract for work that involves the employee working the full number of hours defined by his or her employer as a working week, which is normally around 40 hours each week between Monday and Friday.
PART-TIME EMPLOYMENT
A contract for work in which an employee’s working time is substantially less than a full working week.
CYCLICAL UNEMPLOYMENT
Joblessness caused by deficient demand during an economic downturn or recession.
FRICTIONAL UNEMPLOYMENT
An economic situation in which people find themselves voluntarily out of work usually for short periods of time as they move between jobs.
INVOLUNTARY UNEMPLOYMENT
A condition of being without work against one’s wishes, because there are insufficient jobs available.
REGIONAL UNEMPLOYMENT
Unemployment that is disproportionately concentrated in a particular region in an economy.
SEASONAL UNEMPLOYMENT
Joblessness resulting from seasonal downturns in demand and economic activity in particular industries, such as in tourism, agriculture and construction.
STRUCTURAL UNEMPLOYMENT
Joblessness among workers because their skills are out of date and no longer wanted due to changes in demand patterns or technologies that have resulted in the decline of some established industries in an economy.
TECHNOLOGICAL UNEMPLOYMENT
Joblessness caused by the substitution of labour in production processes by modern, capital equipment.
VOLUNTARY UNEMPLOYMENT
Joblessness resulting from people choosing not to continue in paid employment.
UNEMPLOYMENT RATE
The proportion of the labour force in an economy that is out of work but seeking employment.
POSITIVE EXTERNALITY
This occurs when an individual or firm making a decision will not enjoy the full benefit of that decision. That is, it provides an external benefit for other people and organizations that were not involved in the action or decision that created it.
NEGATIVE EXTERNALITY
This occurs when an individual or firm making a decision will not have to pay the full cost of that decision. That is, the individual or firm imposes an external cost on other people and organizations that did not agree to the action or decision that created it.
COMPLEMENTS
A good or service that is in joint demand with another, for example, cars and petrol, or milk and coffee.
SUBSTITUTES
Products that compete to satisfy the same consumer demand, such as butter and margarine.
Aim Institute of Economics 