PMT definitions - theme 1

• Ad valorem tax


  An indirect tax imposed on a good where the value of the tax is dependent on the value of the good
• asymmetric information 


  where on party has more information than the other, leading to a market failure
• Capital


  One of the four factors of production; goods which can be used in the production process
• capital goods


  goods produced in order to aid production of consumer goods in the future
• ceteris paribus


  all other things remaining the same
• command economy 


  all factors of production are allocated by the state, so hey decide what, how and for whom to produce goods
• complementary goods


  Negative XED; if good B becomes more expensive, demand for good A falls
• consumer goods


  goods bought and demanded by households and individuals
• consumer surplus


  the difference between the price the consumer is willing to pay and the price they actually pay