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IB Economics HL Glossary

Terms in this set (219)

Abnormal Profits, Supernormal Profit or Economic Profit
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Absolute advantage
A country is said to have an absolute advantage in the production of a good if it can produce more of it with the same resources; or, the same amount using fewer resources.
Absolute poverty
Measures the number of people living below the minimum income necessary to satisfy basic physical needs, the 2008 World Bank international poverty line is set at $1.25 purchasing power parity (PPP) per day
Accounting or explicit costs
Production costs for which a firm makes explicit monetary payments
Actual and potential growth
Actual growth refers to increases in real GDP through time, potential growth refers to a shift outwards of the production possibilities frontier or curve.
Ad valorem tax
An indirect tax expressed as a percentage of the price of a product, for example VAT.
Administrative trade barriers (or regulatory trade barriers)
Government or administration regulations or requirements that result in a lower level of imports into a country.
Adverse selection
A problem arising when information in a market is asymmetric and the seller knows more about the characteristics of the good being sold than the buyer. The buyer would be better off trading with someone selected at random from the general population than with the seller.
Aggregate Demand (AD)
Total planned spending on domestic goods and services at various possible average price levels per period of time.
Aggregate Supply (AS)
The planned level of output at various possible price levels that firms are willing to offer per period of time.
Aid
Any flow of capital (grants or loans) from developed to developing countries that is non-commercial from the point of view of the donor and for which the terms are concessional (that is, the interest rate is lower than the market rate and the repayment period longer)
Allocative efficiency
Exists when just the right amount from society;s point of view has been produced. It requires that for the last unit produced, price is equal to its marginal cost (MC), or more generally, that marginal social benefit (MSB) is equal to marginal social cost (MSC)>
Anti-dumping duties
Taxes(tariffs) that bring the import price of the good that is being dumped closer to the price charged by domestic firms in order to avoid injury to the domestic industry in the importing country.
Anti-monopoly regulation
Laws and regulations that aim to restrict monopoly power and monopoly practices in markets.
Appreciation
An increase in the exchange rate within a flexible (floating) exchange rate regime.
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