Circular flow chart (19) is an intuitive economic model, which explains how money flows between households and enterprises through the market. It shows that, under certain assumptions, no scheme can sum up personal preferences into a set of correct social preferences.

59 fixed costs (fixed costs) costs that do not change with the change of output.

A free rider gets the benefits of a commodity, but avoids those who pay for it.

6 1 game theory studies people's behavior under different strategies.

Giffin commodity A commodity whose demand increases due to rising prices.

Horizontal fairness advocates that taxpayers with similar ability to pay should pay the same amount of tax.

The accumulation of human capital is invested in human education and on-the-job training.

The hidden cost does not need the input cost of the enterprise's expenditure currency.

Import goods produced abroad and sold at home.

Something that inspires a person to do something.

Income effect (income effect) The consumption change caused by the price change makes consumers move to a higher or lower indifference curve.

Income elasticity of demand is an index to measure the change degree of consumer's income reflected by the demand of an article, which is calculated by dividing the change percentage of demand by the change percentage of income.

The indifference curve represents the curve of consumption combination that gives consumers the same satisfaction.

7 1 projects with reduced demand due to the increase in income from inferior commodities.

Inflation (inflation) The rise of the overall price level in the economy.

Physical transfer is the transfer to the poor in the form of goods and services rather than cash.

Internalizing external factors has changed the incentive mechanism and made people consider the external influence of their actions.

The law of demand holds that, other things being equal, the price of an article goes up and the demand for it goes down.

The law of supply holds that when other conditions remain unchanged, the price of an article rises and the supply of the article increases.

77 Law of Supply and Demand Any adjustment of commodity prices will balance the supply and demand of commodities.

Liberalism is a political philosophy, according to which the government should choose necessary and just policies. This kind of justice should be evaluated by unbiased critics behind veil of ignorance.

Libertarianism is a political philosophy. According to this philosophy, the government should punish crimes and implement voluntary agreements, but it should not redistribute income.

80 life cycle The change of income in a person's life is regular.

8 1 lump sum tax is an equal tax levied on everyone.

Macroeconomics studies overall economic phenomena, including inflation, unemployment and economic growth.

Incremental adjustment of marginal change smile action plan.

Marginal cost The increase in total cost caused by extra unit output.

An increase in the output of marginal products caused by an increase in the input of one unit.

Marginal product of labor: the output increase caused by each additional unit of labor.

Marginal substitution rate (MRS) is the rate at which consumers are willing to exchange one commodity for another.

Marginal income The change of total income caused by the increase of a sales unit.

Marginal tax rate (marginal tax rate) Additional tax paid for every dollar of income.

A market is a group of buyers and sellers of certain goods or services.

9 1 Market Economy When many enterprises and families trade with each other in the market of goods and services, they allocate resources through their decentralized decisions.

92 market failure (market failure) The situation that the market itself cannot effectively allocate resources.

93. Market power The ability of an economic actor (or a small group of economic actors) to have a significant impact on market prices.

Ma Ximin Criterion An idea that the government's goal should be to maximize people's welfare in the worst situation of society.

95 median voter Theorem A mathematical conclusion shows that if voters are asked to choose a point on a line, and each voter wants to choose the point closest to his favorite point, then the majority principle will choose the point that the median voter likes best.

Microeconomics studies how families and enterprises make decisions and trade with each other in the market.

Enterprises that monopolize and compete to sell similar but different products have various market structures.

Monopoly refers to the exclusive sale of products without similar substitutes by enterprises.

99 moral hazard The tendency of unsupervised people to act disloyal or unpopular.

100 Nash equilibrium interactive economic agents choose their own optimal strategies under the assumption that other agents have a slightly fixed campaign.

10 1 natural monopoly: a monopoly that an enterprise can supply a commodity or service to the whole market at a cost lower than that of two or more enterprises.

102 inputs provided by natural resources for the production of goods and services, such as land, rivers and mineral deposits.

103 negative income tax is a tax system that taxes high-income families and transfers payments to low-income families.

104 projects with increased demand due to the increase of normal good income.

105 specification statement tries to express the view of what the world should be like.

106 oligopoly only a few sellers provide similar or identical products.

107 opportunity cost what you have to give up in order to get something.

108 Completes two terms whose indifference curves are right angles.

Perfect substitution (109) for two projects with straight indifference curves.

1 10 permanent income A person's normal income.

Positive statements try to express their views on the world.

1 12 The poverty line is an absolute income level determined by the federal government according to the size of each family, and families below this level are considered poor.

Percentage of population whose household income is below the absolute level called poverty line.

1 14 price ceiling The legal maximum price at which an item can be sold.

1 15 Price discrimination refers to the commercial behavior of selling the same goods to different customers at different prices.

1 16 the price elasticity of demand is an index to measure the degree of response of the demand of an article to its price change, which is calculated by dividing the percentage of demand change by the percentage of price change.

1 17 supply price elasticity is an index to measure the degree of response of the supply of an article to its price change, which is calculated by dividing the percentage of supply change by the percentage of price change.

1 18 The legal lowest price at which an item can be sold in the reserve price.

1 19 A person who asks another person (called an agent) to perform an act.

120 prisoner's dilemma A special "game" between two arrested prisoners explains why it is difficult to maintain cooperation even if it is beneficial to both sides.

12 1 Private goods are exclusive and competitive.

122 the producer's surplus seller's income from selling a commodity minus its production cost.

123 production function is used to describe the relationship between the input and output of an article.

Production possibility frontier (124) is a chart showing various output combinations that an economy can produce when the available production factors and production technologies are fixed.

125 productivity The quantity of goods and services produced by a worker in an hour.

126 total profit income minus total cost.

127 progressive tax The tax paid by high-income taxpayers is higher than that of low-income taxpayers.

128 the ability of property rights individuals to own and control scarce resources.

129 proportional tax High-income taxpayers and low-income taxpayers pay taxes according to the same proportion of their income.

130 public products are neither exclusive nor competitive.

13 1 quantity demand The quantity of products that the buyer is willing and able to buy.

132 supply quantity The quantity of items that the seller is willing and able to sell.

133 A rational person is a person who systematically and purposefully does what can best achieve his goal.

134 regressive tax (progressive tax) The tax paid by high-income taxpayers is lower than that of low-income taxpayers.

Consumer Competition (135) One person's use of an item will reduce the characteristics of others' use of the item.

136 the finiteness of scarce social resources.

137 screen the actions taken by the uninformed party that lead to the disclosure of information by the informed party.

The state that demand is greater than supply.

139 indicates that the party with information discloses its private information to the party without information.

140 social insurance is a government policy aimed at protecting people from the risk of negative events.

The strike union organized workers to withdraw their labor from the enterprise.

142 substitutes: two kinds of commodities whose rising prices cause demand for another commodity.

143 substitution effect: the change of consumption caused by price changes makes consumers move to a point with a new marginal substitution rate along the established indifference curve.

144 sunk cost has occurred and cannot be recovered.

145 supply curve is a graph showing the relationship between the price and supply of an article.

146 supply schedule is a table showing the relationship between the price and supply of an item.

147 Excess supply exceeds demand.

148 tariff (tariff) A tax levied on goods produced abroad and sold at home.

149 tax destination the way to distribute the tax burden among market participants.

150 total cost (total cost) The market value of the inputs used by the enterprise for production.

15 1 (total income (for a company)) The amount of money an enterprise receives from selling its products.

152 (market) total revenue [in a market] The amount paid by the buyer of a commodity and thus obtained by the seller, calculated by multiplying the price of the commodity by the sales volume.

153 the tragedy of the commons is a fable, which explains why the use of public resources is greater than desirable from the perspective of the whole society.

154 transaction cost (transaction cost) The costs incurred by the parties in the process of reaching and abiding by the agreement.

155 workers' associations where trade unions negotiate wages and working conditions with employers.

156 utilitarianism is a political philosophy. According to this political philosophy, the government should choose a policy that maximizes the total utility of all people in society.

157 Utility is an indicator to measure happiness or satisfaction.

Marginal product value (158) The marginal product invested is multiplied by the product price.

159 variable cost the cost that changes with the change of output.

160 vertical rights claim that taxpayers with stronger ability to pay should pay more taxes.

16 1 government plan to subsidize the income of those in need.

162 welfare economics studies how resource allocation affects economic welfare.

163 willingness to pay: the maximum amount that the buyer is willing to pay for an item.

164 world price The price of a commodity in the world market. .

16 fluctuations in economic activities such as employment and production during the business cycle.

7 Average fixed cost Fixed cost divided by output.

Supplement two projects, in which the price of one project increases and the demand for the other project decreases.

Most principles of Condorcet's paradox do not produce transitive social preferences.

10 Average total cost Total cost divided by output.

1 1 average variable cost variable cost divided by output.

12 benefits principle holds that people should pay taxes according to the benefits they get from government services.

The 13 budget constraint limits the combination of consumption that consumers can afford, and it is the optimal strategy for all participants. 1 the principle of ability to pay holds that taxes should be levied according to a person's ability to pay.

Absolute advantage is the ability to produce something with less input than another producer.

3 accounting profit total income minus total explicit cost.

4 adverse selection from the perspective of uninformed buyers.

Average income Total income divided by sales volume.

Average tax rate Total tax amount divided by total income.

Uneconomical scale The long-term average total cost increases with the increase of output.

4 1 dominant strategy No matter what strategy other participants choose.

14 budget deficit government expenditure is greater than government revenue.

15 budget surplus government revenue is greater than government expenditure.

A demand curve is a graph showing the relationship between the price and demand of a commodity.

A table showing the relationship between the price and demand of a commodity.

17 capital: equipment and buildings used to produce goods and services.

55. The explicit cost requires the input cost of the expenditure currency of the enterprise.

Discrimination is only because of race.

Export: Goods produced in China and sold abroad.

The long-term average total cost remains unchanged with the increase of output.

Coase theorem points out that private parties can negotiate resource allocation without success, so they can solve externalities themselves.

Efficiency: The characteristic that a society can get the maximum benefit from scarce resources.

46 efficiency wage The wages paid by enterprises in order to improve the productivity of workers are higher than the balanced wages.

The Efficient Market Hypothesis is a theory that asset prices reflect all public and available information about asset value.

23 comparative advantage (Comparative advantage) The behavior of a producer to produce an article at a lower opportunity cost than another producer.

5 1 equilibrium price, the price with balanced supply and demand.

Equilibrium quantity supply and demand under equilibrium price.

Characteristics of fair distribution of economic achievements among social members.

Exclusivity: the characteristic of an article that can prevent someone from using it.

2 1 In a collusive market, enterprises reach an agreement on the output produced or the price charged.

Public resources are competitive but not exclusive projects.

24 compensating differential is the wage differential to offset the non-monetary characteristics of different wages.

In a highly competitive market, there are so many buyers and sellers that everyone has little influence on the market price.

The consumer remains the amount that the buyer is willing to pay for a commodity MINUS the amount he actually paid.

Total income from economic profit minus total cost, including explicit cost and implicit cost.

Economics studies how society manages its scarce resources.

The long-term average total cost of economies of scale decreases with the increase of output.

Corrective tax aims to guide private decision makers to consider taxing social costs caused by negative externalities.

3 1 cost The value of everything that the seller must give up in order to produce an item.

Cost-benefit analysis and comparison provide research on the social cost and social benefit of public goods.

The cross-price elasticity of demand indicators, religion and gender measures the degree of response of the demand of one commodity to the price change of another commodity.

Effective scale minimizes the average total cost of output.

Elasticity is an index to measure the response of demand or supply to some decisive factors.

The equilibrium market price reaches the level where supply equals demand. The calculation method is to divide the change percentage of demand of the first item by the change percentage of price of the second item.

34 unnecessary losses, market distortions caused by the reduction of total surplus (such as taxes).

The diminishing marginal product is a feature that the marginal product of input decreases with the increase of input.

38 Declining returns With the increase of investment, similar individuals with different characteristics, ages or other personal characteristics provide different opportunities for the reduction of income from additional investment per unit.

57 Externality The influence of a person's behavior on the welfare of bystanders.

Factors of production are used to produce goods and services, and the unobservable characteristics are mixed with bad tendencies.

A person who performs an act for another person (called a principal).

Arrow's impossibility theorem is a mathematical conclusion.