Glossary Second Term

Budget constraint: also called the balance line or budget line represents the set of all possible combinations of goods or services that, taking their prices as given, would exactly exhaust the consumer's income. (Roldán, s.f).

Consumer surplus: it is the difference between the willingness to pay for a good and the price that consumers pay for it. This is calculated in the monetary benefit, which consumers obtain when they acquired a good or service at a lower price than what they would initially be willing to pay. (Khan Academy, 2019).

Economic utility: the utility of the companies can be identified in the difference between the income and the total cost of the good. (Rodrigo, s.f).

Efficiency: this concept refers to the skill with which an economic system uses its resources, correctly to achieve maximum production of goods and services (Economic Encyclopedia, 2020).

Elastic demand: Is the sensitivity to the variation between two variables x and y. This explains that they are clearly dependent, so in this case it's required study them to determine how much a consumer changes in relation to price. (Khan Academy, 2021).

Inelastic demand: Products in which price change that does not affect the quantity demand. Normally presented in luxury goods (Ellsworth, 2020).

Loss of efficiency: total or partial loss of consumer and producer surplus, derived from underproduction and overproduction of a good. (Case. et al, 2012).

Market equilibrium: it is a point where the quantity of goods demanded by consumers equals the quantity supplied by companies. In this situation, an equilibrium price and an equilibrium quantity are reached (Economic Activities, 2019).

Market failure: this term refers to the negative consequence of the operation of the market and occurs when it is not efficient in the allocation of available resources. (Mandeville, 2011).

Maximum prices: They are all those prices that are below the market price so that the population can access the purchase of the products and demand increases for consumers. (Superintendencia de la Industria y Comercio, 2021).

Minimum prices: It's defined as any price that is above the offered price of a product in the market. Generally, it's established by the state in a certain time to control, regulate and stabilize the prices of products. (Khan Academy, 2021).

Producer surplus: It is the difference between the current market price and the total cost of production for the company. (Sevilla, s.f).

Production costs: also called operating cost, it is the expense necessary to manufacture a good or to generate a service. In this way, it usually includes raw materials and supplies, direct and indirect labor, and other management costs such as depreciation, rent or consulting expenses. (Arias, s.f).

Purchasing power: this concept refers to the amount of goods or services that can be purchased with a certain amount of money, depending on the price level that exists in the market. (BBVA, 2019).

Unit elastic: consists of the change of the quantities demanded of any product of magnitude equal to the percentage change of the price. For this, quantity 1, quantity 2, price 1 and price 2 are required. (Khan Academy, 2021).

 

References

Actividades económicas (2019). Equilibrio del mercado. https://www.actividadeseconomicas.org/2018/02/equilibrio-de-mercado-que-es-tipos-y.html?m=1

Arias, E. (s.f). Costos de producción. Economipedia. https://economipedia.com/definiciones/costo-de-produccion.html

BBVA (2019). Poder adquisitivo en economía. https://www.bbva.mx/educacion-financiera/blog/que-es-el-poder-adquisitivo.html

Case, K. Fair, R & Oster, S. (2012). Pérdida de la Eficiencia. Principios de la economía. Editorial Pearson.

Editorial Grudemi (2018). Eficiencia económica. Recuperado de Enciclopedia Económica (https://enciclopediaeconomica.com/eficiencia-economica/).

Ellsworth, M. (2020). ¿What are inelastic products and how do they affect pricing strategy? Recuperado de https://blog.wiser.com/es/what-are-inelastic-products-and-how-do-they-impact-pricing-strategy/

Khan Academy (2019). Excedente del consumidor. https://es.khanacademy.org/economicsfinancedomain/microeconomics/consumer-producer-surplus/consumer-producer-surplus-tut/a/lesson-overview-consumer-and-producer-surplus

Khan Academy. (2021). Elastic. Recuperado de https://es.khanacademy.org/economics-financedomain/microeconomics/elasticity-tutorial

Khan Academy. (2021). Minimum wage and minimum prices. Recuperado de https://es.khanacademy.org/economics-finance-domain/microeconomics/consumer-producer-surplus/deadweight-loss-tutorial/v/minimum-wage-and-price-floors

Khan Academy. (2021). Unit elastic. Recuperado de https://es.khanacademy.org/economics-finance-domain/microeconomics/elasticity-tutorial/price-elasticity-tutorial/v/constant-unit-elasticity

Mandeville, B. (2011). Fallo del Mercado. https://www.mheducation.es/bcv/guide/capitulo/8448175476.pdf

Rodrigo, R. (s.f). ¿Cuáles son los cuatro tipos de utilidad económica? https://exonegocios.com/cuales-son-los-cuatro-tipos-de-utilidad-economica/

Roldán, P. (s.f.). Restricción presupuestaria. https://economipedia.com/definiciones/restriccion-presupuestaria.html

Sevilla, A. (s.f.). Excedente del productor. Economipedia. https://economipedia.com/definiciones/excedente-del-productor.html#:~:text= El%20excedente%20del%20productor%20es,la%20ley%20de%20rendimientos%20decrecientes.&text=Si%20se%20resta%20a%20esta,obtiene%20el%20excedente%20del%20productor.

Superintendecia de la Industria y Comercio. (2021). Price control. Recuperado de https://www.sic.gov.co/control-de-precios