Archives: Terms

Definition of Public Choice Public Choice theory is the use of economic tools to deal with traditional problems of political science. Its basic premise is that individuals are self-interested and that politicians, bureaucrats, and voters behave much like consumers and sellers in a market, focusing on maximizing their utility. This […]

Definition of Public Bad Public bad is a term used in economics to describe goods or services that result in negative externalities affecting the whole society or significant portions of it. Unlike public goods, which are non-rivalrous and non-excludable, creating positive externalities, public bads are detrimental to social welfare. They […]

Definition of Prospect Theory Prospect Theory is a psychological and behavioral economic theory that describes how people choose between probabilistic alternatives that involve risk, where the probabilities of outcomes are uncertain. Developed by Daniel Kahneman and Amos Tversky in 1979, this theory challenges the traditional expected utility theory, proposing that […]

Definition of Profit Motive The profit motive is the inherent drive or incentive for individuals and businesses to earn a profit from their endeavors. This economic principle underpins the market economy’s functioning, suggesting that entities are motivated to undertake activities that lead to financial gain. Profit motive is a fundamental […]

Definition of Proebsting’s Paradox Proebsting’s Paradox is an intriguing concept in the sphere of economics that underscores the counterintuitive impacts of technology advancements on productivity and economic performance. Specifically, the paradox suggests that, under certain conditions, improvements in technology do not lead to an anticipated increase in overall productivity, but […]

Definition of Production Set The production set is a concept in economics that refers to all the combinations of inputs used by a firm or an economy to produce different levels of outputs. It’s a representation of the technological capabilities and limitations of a production process, illustrating the maximum output […]

Introduction to the Productivity Paradox The productivity paradox refers to the phenomenon where increases in investments in information technology (IT) do not appear to produce corresponding increases in labor productivity at an organizational level or across the economy. This counterintuitive situation was particularly noted in the late 20th century, amidst […]

Definition of Productivism Productivism is an economic, social, and political ideology that places a high value on production, productivity, and economic growth. It emphasizes the importance of maximizing output and efficiency, often prioritizing these over other considerations such as environmental sustainability, social equity, and quality of life. The core belief […]

Definition of Production Possibilities Curve The Production Possibilities Curve (PPC), also known as the Production Possibilities Frontier (PPF), is a graphical representation that shows the maximum quantity of two goods or services that can be produced within a given time period, assuming the full and efficient use of available resources. […]

Definition of Producer Price Index (PPI) The Producer Price Index (PPI) is a measure of the average change over time in the selling prices received by domestic producers for their output. Unlike consumer price indexes, which measure price changes from the consumer’s perspective, the PPI focuses on the prices from […]