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| Economic shortage
| is a term describing a disparity between the amount demanded for a product or service and the amount supplied in a market. Specifically, a shortage occurs when there is excess demand; therefore, it is the opposite of a surplus.
Economic shortages are related to price – when the price of an item is set below the going rate determined by supply and demand, there will be a shortage. In most cases, a shortage will compel firms to increase the price of a product until it reaches market equilibrium. Sometimes, however, external forces cause more permanent shortages- in other words, there is something preventing prices from rising or otherwise keeping supply and demand unbalanced.
In common use, the term "shortage" may refer to a situation where most people are unable to find a desired good at an affordable price. In the economic use of "shortage", however, the affordability of a good for the majority of people is not an issue: If people wish to have a certain good but cannot afford to pay the market price, their wish is not counted as part of demand.
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| Opportunity Costs
| Opportunity cost is the cost of any activity measured in terms of the value of the best alternative that is not chosen. It is the sacrifice related to the second best choice available to someone, or group, who has picked among several mutually exclusive choices. Opportunity cost is a key concept in economics, and has been described as expressing "the basic relationship between scarcity and choice". The notion of opportunity cost plays a crucial part in ensuring that scarce resources are used efficiently.
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| Operating expense
| In business, it is a day-to-day expense such as sales and administration, or research & development, as opposed to production, costs, and pricing. In short, this is the money the business spends in order to turn inventory into throughput.
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| Fixed costs
| In economics, they are business expenses that are not dependent on the level of goods or services produced by the business. They tend to be time-related, such as salaries or rents being paid per month, and are often referred to as overhead costs.
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| Variable costs
| are expenses that change in proportion to the activity of a business. Variable cost is the sum of marginal costs over all units produced. It can also be considered normal costs. Fixed costs and variable costs make up the two components of total cost.
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| Total cost (TC)
| In economics, and cost accounting, it describes the total economic cost of production and is made up of variable costs, which vary according to the quantity of a good produced and include inputs such as labor and raw materials, plus fixed costs, which are independent of the quantity of a good produced and include inputs (capital) that cannot be varied in the short term, such as buildings and machinery. Total cost in economics includes the total opportunity cost of each factor of production as part of its fixed or variable costs.
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| Marginal cost
| The rate at which total cost changes as the amount produced changes
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| Asset turnover
| is a financial ratio that measures the efficiency of a company's use of its assets in generating sales revenue or sales income to the company.
Companies with low profit margins tend to have high asset turnover, while those with high profit margins have low asset turnover. Companies in the retail industry tend to have a very high turnover ratio due mainly to cutthroat and competitive pricing.
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| Turnover (employment)
| relative rate at which an employer gains and loses staff, especially in North American usage
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| Customer turnover,
| the rate at which a business loses customers, sometimes called the churn
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| Public goods
| The services provided by governments are usually considered as public goods, since, if provided; even those who would not prefer to pay for them can enjoy such services. The most normally cited example of such a public good is national defense. Once it is secured, everybody can simply benefit without having to contribute to the cost of production. The other example is maintenance of law and order. Examples of public goods include flood control systems, street lighting and national defense. Public goods (in fact most of them are services!) are not normally provided by the private sector in an economy.
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| Law of demand
| In economics, the law of demand is an economic law that states that consumers buy more of a good when its price decreases and less when its price increases (ceteris paribus).
The greater the amount to be sold, the smaller the price at which it is offered must be, in order for it to find purchasers.
Law of demand states that the amount demanded of a commodity and its price are inversely related, other things remaining constant. That is, if the income of the consumer, prices of the related goods, and tastes and preferences of the consumer remain unchanged, the consumer’s demand for the good will move opposite to the movement in the price of the good.
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| Expansionary fiscal policy
| is an increase in government expenditures and/or a decrease in taxes that causes the government's budget deficit to increase or its budget surplus to decrease.
The classical view of expansionary or tight fiscal policies is that such policies are unnecessary because there are market mechanisms—for example, the flexible adjustment of prices and wages—which serve to keep the economy at or near the natural level of real GDP at all times. Accordingly, classical economists believe that the government should run a balanced budget each and every year.
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| Law of Supply
| Law of Supply states that at higher prices, producers are willing to offer more products for sale than at lower prices. It states that the supply increases as prices increase and decreases as prices decrease. It states that those already in business will try to increase productions as a way of increasing profits.
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| Law of supply and demand
| Supply and demand is an economic model of price determination in a market. It concludes that in a competitive market, the unit price for a particular good will vary until it settles at a point where the quantity demanded by consumers (at current price) will equal the quantity supplied by producers (at current price), resulting in an economic equilibrium of price and quantity.
The four basic laws of supply and demand are:[1]
If demand increases and supply remains unchanged, then it leads to higher equilibrium price and quantity.
If demand decreases and supply remains unchanged, then it leads to lower equilibrium price and quantity.
If supply increases and demand remains unchanged, then it leads to lower equilibrium price and higher quantity.
If supply decreases and demand remains unchanged, then it leads to higher price and lower quantity.
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| What happens to the supply curve if supply increases?
| While changes in price result in movement along the supply curve, changes in other relevant factors cause a shift in supply, that is, a shift of the supply curve to the left or right. Such a shift results in a change in quantity supplied for a given price level. If the change causes an increase in the quantity supplied at each price, the supply curve would shift to the right.
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| Exchange rate
| There are such factors which influence the exchange rate, such as interest rates, inflation, and the state of politics and the economy in each country
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| Custom duty
| A tax levied on imports (and, sometimes, on exports) by the customs authorities of a country to raise state revenue, and/or to protect domestic industries from more efficient or predatory competitors from abroad. Customs duty is based generally on the value of goods or upon the weight, dimensions, or some other criteria of the item (such as the size of the engine, in case of automobiles).
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| Salary
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| Wage
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| Mortgage insurance
| is an insurance policy designed to protect the mortgagee (lender) from any default by the mortgagor (borrower). It is used commonly in loans with a loan-to-value ratio over 80%, and employed in the event of foreclosure and repossession.
This policy is typically paid for by the borrower as a component to final nominal (note) rate, or in one lump sum up front, or as a separate and itemized component of monthly mortgage payment. In the last case, mortgage insurance can be dropped when the lender informs the borrower, or its subsequent assigns, that the property has appreciated, the loan has been paid down, or any combination of both to relegate the loan-to-value under 80%.
In the event of repossession, banks, investors, etc. must resort to selling the property to recoup their original investment (the money lent), and are able to dispose of hard assets (such as real estate) more quickly by reductions in price. Therefore, the mortgage insurance acts as a hedge should the repossessing authority recover less than full and fair market value for any hard asset.
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| Excise tax
| is a tax on use or consumption of certain products. Excise taxes are sometimes included in the price of a product, such as motor fuels, cigarettes, and alcohol. Excise taxes may also be imposed on some activities, like gambling. Excise taxes may be imposed by the federal government or by a state.
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| Liquid Assets
| An asset that can be converted into cash in a short time, with little or no loss in value. Liquid assets include items such as accounts receivable (дебиторская), demand and time deposits, gilt edged securities (Gilts are bonds issued by certain national governments. The term is of British origin, and originally referred to the debt securities issued by the Bank of England, which had a gilt (or gilded) edge. Hence, they are called gilt-edged securities, or gilts for short.) In some countries, precious metals (usually gold and silver) are also considered liquid assets. Also called quick asset.
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| Balanced budget
| A balanced budget is when there is neither a budget deficit nor a budget surplus – when revenues equal expenditure – particularly by a government. More generally, it refers to when there is no deficit, but possibly a surplus. A cyclically balanced budget is a budget that is not necessarily balanced year-to-year, but is balanced over the economic cycle, running a surplus in boom years and running a deficit in lean years.
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| Externalities
| Externalities are common in virtually every area of economic activity. They are defined as third party (or spill-over) effects arising from the production and/or consumption of goods and services for which no appropriate compensation is paid. The benefits of externalities, in this case, is called a positive externality or external benefit, while its cost is called a negative externality or external costs.
For example, the production of energy in a nuclear power plant benefits the owners of the power plant, but creates externalities in the form of radioactive waste for the environment and its inhabitants.
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| loan-to-value (LTV) ratio
| expresses the amount of a first mortgage lien as a percentage of the total appraised value of real property.
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| A debt-to-income ratio
| (often abbreviated DTI) is the percentage of a consumer's monthly gross income that goes toward paying debts.
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| Home insurance, hazard insurance or homeowner's insurance
| is the type of property insurance that covers private homes. It is an insurance policy that combines various personal insurance protections, which can include losses occurring to one's home, its contents, loss of its use (additional living expenses), or loss of other personal possessions of the homeowner, as well as liability insurance for accidents that may happen at the home or at the hands of the homeowner within the policy territory
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| Perpetual insurance
| is a type of homeowners insurance policy written to have no term, or date, when the policy expires.
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| Classical or real-wage unemployment
| occurs when real wages for a job are set above the market-clearing level, causing the number of job-seekers to exceed the number of vacancies.
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| Structural unemployment
| is a form of unemployment resulting from a mismatch between demand in the labour market and the skills and locations of the workers seeking employment.
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| Frictional unemployment
| is the time period between jobs when a worker is searching for, or transitioning from one job to another. It is sometimes called search unemployment and can be voluntary based on the circumstances of the unemployed individual.
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| valuation
| In finance, it is the process of estimating what something is worth. Items that are usually valued are a financial asset or liabilit
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| Deposit premium
| is a type of insurance premium where the insured deposits money with the insurer to obtain perpetual insurance against the risk of a loss. Deposit premiums are unique from regular insurance premiums, because they are refundable should either the insured or the insurer chose to terminate the perpetual insurance.
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| assets
| In financial accounting they are economic resources. Anything tangible or intangible that is capable of being owned or controlled to produce value and that is held to have positive economic value is considered an asset.
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| balance sheet or statement of financial position
| In financial accounting, it is a summary of the financial balances of a sole proprietorship, a business partnership or a company. Assets, liabilities and ownership equity are listed as of a specific date, such as the end of its financial year. A balance sheet is often described as a "snapshot of a company's financial condition".
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| Real income
| is the income of individuals or nations after adjusting for inflation. It is calculated by subtracting inflation from the nominal income. Real variables, such as real income, real GDP, and real interest rate are variables that are measured in physical units, while nominal variables such as nominal income, nominal GDP, and nominal interest rate are measured in monetary units.
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| A customs duty
| is a tariff or tax on the importation (usually) or exportation (unusually) of goods.
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| An excise or excise tax (sometimes called a duty of excise special tax)
| is commonly referred to as an inland tax on the sale, or production for sale, of specific goods; or, more narrowly, as a tax on a good produced for sale, or sold, within a country or licenses for specific activities. Excises are distinguished from customs duties, which are taxes on importation. Excises are inland taxes, whereas customs duties are border taxes. An excise is considered an indirect tax, meaning that the producer or seller who pays the tax to the government is expected to try to recover the tax by raising the price paid by the buyer (that is, to shift or pass on the tax).
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| Royalties
| are usage-based payments made by one party (the "licensee") to another (the "licensor") for the right to ongoing use of an asset, sometimes an intellectual property (IP). Royalties are typically agreed upon as a percentage of gross or net revenues derived from the use of an asset or a fixed price per unit sold of an item of such, but there are also other modes and metrics of compensation.A royalty interest is the right to collect a stream of future royalty payments, often used in the oil and music industries to describe a percentage ownership of future production or revenues from a given leasehold, which may be divested from the original owner of the asset.
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| Absolute advantage
| refers to the ability of an economic unit (a country, for example) to produce more of any given goods at a lower cost of production than another economic unit.
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| Ad valorem tax
| :(in Latin: to the value added) - a tax based on the value (or assessed value) of property. Ad valorem tax can also be levied on imported items.
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| Asset
| : Anything of monetary value that is owned by a person. Assets include real property, personal property, and enforceable claims against others
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| Aggregate demand
| is the sum of all demand in an economy. This can be computed by adding the expenditure on consumer goods and services, investment, and not exports (total exports minus total imports)
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| Aggregate supply
| is the total value of the goods and services produced in a country, plus the value of imported goods less the value of exports.
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| Average propensity to consume
| is the proportion of income the average family spends on goods and services.
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| Balance of trade
| : The difference in value over a period of time between a country's imports and exports.
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| Bid price
| : The highest price an investor is willing to pay for a stock.
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| Bond
| : A certificate of debt (usually interest-bearing or discounted) that is issued by a government or corporation in order to raise money; the bond issuer is required to pay a fixed sum annually until maturity and then a fixed sum to repay the principal.
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| Break even: This is a term used to describe a point at which revenues equal costs (fixed and variable).
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| Cartel
| : An organization of producers seeking to limit or eliminate competition among its members, most often by agreeing to restrict output to keep prices higher than would occur under competitive conditions. Cartels are inherently unstable because of the potential for producers to defect from the agreement and capture larger markets by selling at lower prices.
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| Copyright
| : A legal right (usually of the author or composer or publisher of a work) to exclusive publication production, sale, distribution of some work. What is protected by the copyright is the "expression," not the idea. Notice that taking another's idea is plagiarism, so copyrights are not the equivalent of legal prohibition of plagiarism.
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| Countervailing duties
| : duties (tariffs) that are imposed by a country to counteract subsidies provided to a foreign producer
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| Crowding out
| : The possible tendency for government spending on goods and services to put upward pressure on interest rates, thereby discouraging private investment spending.
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| Currency substitution
| : The use of foreign currency (e.g., U.S. dollars) as a medium of exchange in place of or along with the local currency
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| Elasticity of demand
| : The degree to which consumer demand for a product or service responds to a change in price, wage or other independent variable. When there is no perceptible response, demand is said to be inelastic.
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| Excess demand
| : the situation in which the quantity demanded at a given price exceeds the quantity supplied. Opposite: excess supply
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| Externalities
| : A cost or benefit not accounted for in the price of goods or services. Often "externality" refers to the cost of pollution and other environmental impacts.
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| Foreign exchange reserves
| : The stock of liquid assets denominated in foreign currencies held by a government's monetary authorities (typically, the finance ministry or central bank). Reserves enable the monetary authorities to intervene in foreign exchange markets to affect the exchange value of their domestic currency in the market. Reserves are invested in low-risk and liquid assets, often in foreign government securities.
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| Fringe benefit
| : A benefit in addition to salary offered to employees such as use of company's car, house, lunch coupons, health care subscriptions
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| Index of industrial production
| : A quantity index that is designed to measure changes in the physical volume or production levels of industrial goods over time.
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| Performance budget
| is a budget format that relates the input of resources and the output of services for each organizational unit individually.
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| Poverty gap
| : The sum of the difference between the poverty line and actual income levels of all people living below that line.
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| Revenue receipts
| : Additions to assets that do not incur an obligation that must be met at some future date and do not represent exchanges of property for money. Assets must be available for expenditures. These include proceeds of taxes and duties levied by the government, interest and dividend on investments made by the government, fees and other receipts for services rendered by the government.
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| Subsidy
| : A payment by the government to producers or distributors in an industry to prevent the decline of that industry (e.g., as a result of continuous unprofitable operations) or an increase in the prices of its products or simply to encourage it to hire more labor (as in the case of a wage subsidy).
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| Tax avoidance
| : A legal action designed to reduce or eliminate the taxes that one owes.
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