Archives: Terms

Definition of Per Capita GDP Per Capita GDP, also known as GDP per capita, is a measure of the average economic output per person in a given country. It is calculated by dividing the total Gross Domestic Product (GDP) of a country by its population. Per Capita GDP provides insight […]

Definition of Per Capita Per Capita is a Latin term that translates to “per head” or “for each person.” It is used to describe a measurement or statistic that is calculated by dividing the total amount of a particular variable by the population size. Essentially, it provides an average value […]

Definition of Peer-to-Peer (P2P) Economy The Peer-to-Peer (P2P) economy refers to a decentralized economic system where individuals can directly interact and transact with each other without the need for intermediaries. In this type of economy, participants can share resources, goods, or services directly with one another, often facilitated by online […]

Definition of Payroll Tax A payroll tax is a tax that is levied on the wages and salaries of employees. It is typically withheld by employers and paid directly to the government. Payroll taxes are used to fund various social programs such as Social Security, Medicare, and unemployment compensation. The […]

Definition of Participation Rate The participation rate is a measure that calculates the percentage of the population that is either employed or actively seeking employment. It helps gauge the level of participation of the working-age population in the labor force. Example Consider a country with a population of 100 million […]

Definition of Parity Price A parity price is the price at which a product or commodity covers its production cost. It represents a fair and reasonable price that allows producers to earn a reasonable rate of return on their investment and incentivizes them to continue producing the product. Example Let’s […]

Definition of Pareto Principle The Pareto Principle, also known as the 80/20 rule, states that roughly 80% of the effects come from 20% of the causes. This principle is named after Italian economist Vilfredo Pareto, who observed that 80% of the land in Italy was owned by 20% of the […]

Definition of Pareto Improvement Pareto improvement refers to a situation in which at least one individual is better off without making anyone else worse off. In other words, it occurs when a change in allocation or distribution of resources increases overall societal welfare without causing any harm to any individual […]

Definition of Pareto Efficiency Pareto Efficiency is an economic concept that describes a situation in which resources are allocated in the most efficient way possible, such that it is impossible to make any individual better off without making someone else worse off. In other words, it represents the optimal allocation […]

Definition of Paradox of Thrift The paradox of thrift refers to the situation where an increase in saving by individuals, with the intention of being financially responsible and preparing for the future, actually leads to a decrease in overall economic activity and can worsen a recession. This paradox arises from […]