UNIT 1

Macroeconomics - Part of theoretical science which defines economy as an integral \ .lem, forms objectives of economic policy, defines tools necessary for ft realization.

Microeconomics - Part of theoretical science which defines interaction of individu­al Icfenomic entities at the level of local markets.

Household - Individual subjects or groups which combine their profits and Dime decisions concerning expenses jointly.

Political economy - Science which studies economic relationship concerning pro­duction, distribution, exchange and consuming of material benefits and vices.

Firm - Economic entity which makes individual decision concerning j*iuluction and sale of goods.

Positive analysis- Knowledge, explanation and forecasting of objectively existing Homic phenomena and processes.

Normative analysis - Finding out of the conditions for achievement of economically maximai result under existing expenses, estimation of the correctness d made decisions.

Economic model - System of interconnection between economic variables whitI» allow to forecast the result.

Hypothesis- Scientific assumption used for explanation of any phenomoill which requires practical verification and theoretical substantiation to hi come a trustworthy theory.

Robin Hood’s effect- Controversy between interim and final results.

UNIT 2

Consumers’ preferences - Ranks which are established by the consumer for alternative op­portunities of his needs satisfaction.

utility - Satisfaction which economic subject receives during consump- lloii of these or those goods or services or certain type of activity.

the budget - Money volumes which a consumer is able to spend on the pur- liiise of goods and services during the certain period of time.

marginal utility - Satisfaction brought by the additional unit of product consump­tion to consumer.

the marginal rate of substitution - Goods quantity which the consumer is ready to refuse for con- .tiiiiption of the additional unit of the other product.

Transitivity - If the consumer prefers the good A in comparison with the good i II, Ihe good B in comparison with the good C, he prefers the good A in »Miparison with the good C.

the indifference curve - Combinations of the sets of the goods A and B which bring the lonsumer equal utility.

the equilibrium of consumer - Condition of the consumer under which he purchases goods at № certain prices in such volumes that he uses, his total revenue and i miximizes utility.

equimarginal principle - Marginal utilities of the goods per one price unit are equal.

budgetary restrictions - The line which graphically shows the sets of goods the pur- |flmsc of which requires the same expenses.

a grid of the consumer - The set of variants of the consumer choice, each of which has UC same utility.

UNIT 3

the «revenue-consumption» line - The curve which shows the dependence between the change) n| the value of consumption and the consumer’s revenue change.

Inferior goods -The goods demand on which decreases under the revenue lit creases and increases under its decrease.

Engel curve -The line which connects all consumer’s equilibrium points id cording to his revenue increase.

neutral goods -The goods demand on which increases under the revenue Ini crease.

The price-consuption line -The line which connects all points of the consumer’s equilihi llllfly under the price change for the goods from the consumption set.

substitution effect -Impact of the price change for one product from the consunii|l* tion set on the structure of these goods consumption.

Giffen goods -The inferior goods which take the significant place in the id sumer’s budget and have the ascending curve of demand.

revenue effect -Impact of the price change for one product from the conNUHMji tion set on the real consumer’s revenue.

superior goods -The goods demand on which increases sharply under the m J nue ttcrease.

Giffen paradox -There is a demand increase for the inferior goods utidi i flfl

price increase on them.

UNIT 4

coefficient of the price elasticity of demand - Relation of the percent change of the quantity demanded and the percent change of the price.

the prize of the consumer - Difference between the marginal utility of each additional unit ill'the good, expressed in money and by the price of the goods.

coefficient of the cross elasticity of demand - Relation between the percent change of the quantity demanded lor this good and percent change of the price of other good.

elastic demand - The demand for which the coefficient of the price elasticity is more than one.

perfectly inelastic demand - The demand the value of which stays unchangeable under the price change.

coefficient of demand elasticity by revenue - Relation of the percent change of the quantity demanded for the fclven goods to the percent change of the consumer’s revenue.

demand of the unit elasticity - The demand for which coefficient of the price elasticity equals

Inelastic demand - Demand for which coefficient of the price elasticity is less than

nlie.

the curve of the market demand - Total quantity demanded by all consumers within this market under all price levels.

perfectly elastic demand - The situation under which the quantity demanded changes un~ ili i the unchangeable price of the goods.

UNIT 5

Production - The process of influence'on the natural substance with the pm pose to give it properties and forms suitable for the needs satisfaction.

positive effect of the production scale growth - The increase of production volume with the faster rate in com­parison with an increase of the inputs of all used resources production.

Input - Everything that a producer purchases for use with the produc­tion purposes.

Isoquant - The curve which connects all combinations of resources, use <>l which provides the same volume of output.

total product - Volume of output which is used for the definite amount of tin , factor.

constant effect of the production scale growth - The same rates of the volume of production increase as an in crease of all inputs of all used resources for production.

marginal product - The volume of the good which is used per unit of the factor.

production function - Maximum possible output of the definite good under the use ol all possible combinations of production factors.

Additional output of the good which is connected with the in crease of the production factor per one unit under the other unchangc able production factors.

negative effect of the production scale growth - An increase of the volume of production with the slower ratei in comparison with an increase of spending of all used resources for pro­duction.

map of isoquants - An isoquant set, each of which shows the maximal output ol the goods, which is achieved under the use of the definite resource« combinations.

marginal rate of technical substitution - The quantity of one resource consumption of which is possi­ble t6 refuse under the increase of the quantity of the other resourcu per unit, under condition of saving unchangeable volumes of produc­tion.

the law of diminishing marginal productivity - With the increase of use of the definite production factor (uncln the unchangeable others) the point will be achieved sooner or later, in

long-run period - Period which is enough for the change of all production actors.

short-ran period - Period during which producers have the opportunity to change >nly the part of the used resources.

Unit 6

Marginal costs – additional expenses dealt with the production increase of a certain product for one unit.

Internal costs – alternate costs of the use of resources which belong to the owners of the firm.

Normal profit – set of all costs for the production.

Average costs – constant costs for the unit of the output.

Average variable costs – variable costs for the unit of the output.

Variable costs – costs changed with the change of the output.

Equilibrium of a producer – equal ratio of marginal productivity of the production factors and their market prices.

UNIT 7

market of the perfect competition - The market at which the large amount of sellers and buyers of standardized production act, and no one of them can control the price of | ii product.

Monopsony - The market at which the only one buyer of product or service acts.

loses minimization event - The market at which a lot of firms sell the differentiated product I lind the access to which is comparatively free.

total revenue - The total revenue of a firm for the certain period of time from all ■types of economic activity.

Oligopoly - The market at which several firms sell the standardized or dif- I (brentiated products and the control over prices is limited by interdepen­dence of the firms.

marginal revenue - Revenue which is got by a firm from the sale of one unit of pro- llluction.

one who agrees with the price - A seller of a product who is not able to influence its price to the pay of the quantity of production offered at the market of production.

the rule MR = MC - Conditions which bring the economic profit to the competilivi¹ firm, when it produces the production volume at which the economic profit is maximal or loses are minimal.

average revenue - Additional revenue got as a result of an increase of the volume of the product sale per one unit.

the point of the critical production volume - Any volume of production of the competitive firm at which III*' total sum of the costs equals the total revenue.

Conditions which cause the loses volume of which is less thnii the total fixed costs when the competitive firm produces production, which gives it maximal total revenue and when the price at which llic firm can sell its production is less than the average total costs, hill in higher than the average variable costs.

pure monopsony -The market at which the only one firm acts, which offers flu product which doesn’t have close substitutes and it is protected limn competition with high barriers to enter the branch.

firm’s closure event - Conditions which cause the loses appearance and which iim higher than the total volume of the fixed costs at any volume of protliu

tion.

Branch in which the production expansion is caused by the mu firms entrance into it and by the prices increase for resources conned ed with this fact.

supply curve in the short-run period - The curve which shows the quantity of the product which is n|> fered by a firm in perfectly competitive branch at different prices dm m e the short-run period.

profit maximization event - The rule according to which a firm maximizes its economli profit, producing production under conditions when the marginal pmil uct equals the marginal costs.

branch with the fixed production costs - Branch in which the production expansion is a result of lilt* new firms appearance does not influence the prices of the production resources.

UNIT 8

Monopoly - Market at which one firm sells the product which doesn’t have the close substitutes and is able to control its market price.

price discrimination - The sale of the same product at the same moment to different

buyers at different prices.

unfair competition - Practice which is used by the firm to block the access of compet­itors into the competitors’ branch which is evaluated by a society as un­acceptable way of the certain purpose achievement.

X-ineffectiveness - Situation when the firm’s actual costs for any production volume are higher than the minimal possible costs.

barriers to entry into the branch - Actions which artificially prevent the new firms’ entry into the branch.

natural monopoly - The branch in which the economy at the production scale is so

large, that the product can be produced by one firm at the lower average costs than at the situation when this product production will be earned out by more than one firm.

Patent - The exclusive rights granted to the inventor of the product for its production and sale.

license - Legislative restrictions on the firm’s activities.

UNIT 9

Monopolistic competition - Market at which a lot of firms sell the differentiated product and have the opportunity to control the market price in some limits.

Non price competition - Methods of competition which are applied in a sphere of the product’s differentiation, advertisement and distribution stimulation.

product’s differentiation - Physical or other differences between the products of different firms which call the desire of individual buyers to buy products only ol' the one firm at condition that sellers sell these products at the same price.

Results of the monopolistic competition - Partiall use of resources, higher costs per unit of production, un­loaded production power.

Forms of the products differentiation - Quality of production, buyer service, territorial placement of the trading outlets and so on.