Definition of Production Possibility Frontier The Production Possibility Frontier (PPF) is a graphical representation of the maximum possible output combinations of two goods or services an economy (or individual) can achieve when all resources are fully and efficiently employed. That means it illustrates the trade-offs people face when they have […]
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Profit
Definition of Profit Profit is defined as the difference between total revenue and total costs. That means it is the amount of money a company earns after subtracting all its expenses. In other words, it is the reward for taking on the risk of running a business. Note that different […]
Read moreProgressive Tax
Definition of Progressive Tax A progressive tax is a tax system in which the tax rate increases as the taxable amount increases. That means the more money you make, the higher your tax rate will be. This type of tax system is based on the so-called ability-to-pay principle and is […]
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Definition of Proportional Tax A proportional tax is a type of tax that is applied uniformly to all taxpayers regardless of their income level. That means the tax rate is the same for everyone and does not change with the amount of income. This type of tax is also known […]
Read morePrivate Goods
Definition of Private Goods Private goods are goods that are excludable and rival in consumption. Excludable means they can be withheld from people who do not pay for them. Rival means that if they are consumed by one person, this prevents another person from consuming them. In that regard, private […]
Read morePrivate Saving
Definition of Private Saving Private saving is the amount of money that households and businesses save out of their current income. That means it is the difference between their disposable income and their consumption. Or in other words, it is the amount of money that private individuals or companies save […]
Read moreProductivity
Definition of Productivity Productivity is defined as the ratio of output to input. That means it measures how efficiently an organization or individual uses its resources to produce goods or services. Or in other words, it is a measure of how much output is produced with a given amount of […]
Read morePublic Goods
Definition of Public Goods Public goods are goods or services that are available to all members of society without any exclusion. That means they are non-rivalrous and non-excludable (unlike other types of goods). Non-rivalrous means that one person’s consumption of the good does not reduce the amount available for others. […]
Read morePublic Saving
Definition of Public Saving Public saving is defined as the difference between the government’s total revenue and its total expenditure. That means it is the amount of money the government has left over after it has paid for all its expenses. It is also known as the government’s budget surplus. […]
Read morePurchasing Power Parity
Definition of Purchasing Power Parity Purchasing Power Parity (PPP) is an economic theory that states that the exchange rate between two currencies is equal to the ratio of the two countries’ price levels. That means it is a measure of the relative purchasing power of two currencies in different economies. […]
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