Archives: Terms

Definition of Cardinal Utility Cardinal utility is an economic concept that quantifies the satisfaction or happiness that consumers derive from consuming goods and services. Unlike ordinal utility, which simply ranks preferences, cardinal utility assigns specific numerical values to levels of satisfaction. This approach allows for the measurement of utility in […]

Definition of Carbon Tax A carbon tax is a fee imposed on the burning of carbon-based fuels (coal, oil, gas). It is a form of carbon pricing designed to reduce the use of fossil fuels whose combustion is wreaking havoc on our climate, leading to global warming and climate change. […]

Definition of CAPM CAPM, or the Capital Asset Pricing Model, is a formula used to determine the theoretical expected return of an investment. It accounts for the risk-free rate, the risk inherent to the market, and the amount of systematic risk present in a specific investment, known as its beta. […]

Definition of Capitalism Capitalism is an economic system characterized by private ownership of the means of production and their operation for profit. Central elements include capital accumulation, competitive markets, a price system, private property, and the recognition of property rights, voluntary exchange, and wage labor. In a capitalist economy, decision-making […]

Definition of Capital-Output Ratio The capital-output ratio is a key economic indicator that measures the efficiency of capital in producing output. This ratio is calculated by dividing the total capital stock by the total output (typically gross domestic product – GDP) of an economy. In simpler terms, it shows how […]

Definition of Capital-Labour Ratio The capital-labour ratio is a key measure in economics that represents the relationship between the amount of capital employed in production and the number of labor hours worked. It is defined as the total capital stock divided by the total labor input in terms of hours […]

Definition of Capital-Augmenting Technical Progress Capital-Augmenting Technical Progress refers to innovations or improvements in technology that specifically increase the effectiveness or productivity of capital in the production process. Unlike labor-augmenting technical progress, which improves the efficiency of labor, capital-augmenting progress means that with the same amount of capital investment, a […]

Definition of Capital Widening Capital widening occurs when an economy or a firm increases its capital stock at the same rate as its workforce, maintaining the capital-to-labor ratio constant. This concept is distinct from capital deepening, where the capital stock grows faster than the labor force, thereby increasing the capital-per-worker […]

Definition of Capital Transfers Capital transfers refer to transactions where the ownership of assets changes from one entity to another without any quid pro quo exchange, meaning the transferor does not receive anything in return. These transfers can involve both financial assets (such as money) and non-financial assets (such as […]

Definition of Capital Transfer Tax Capital transfer tax is a form of tax levied on the transfer of assets from one entity to another. This tax is applied to the value of the assets being transferred and is most commonly associated with inheritances or gifts exceeding a certain threshold. The […]