ECONOMICAL TERMS SET 1

absolute advantage ; an advantage derived from one country having a lower absolute input cost of producing a particular good than another country

abnormal profit;  total revenue less total costs except for the opportunity cost of capital; revenue less costs except opportunity costs of owner’s capital

adaptive expectation;  an expectation formed on the basis of information collected in the past

adverse selection;  a situation where a lack of information causes low-quality items to dominate a market and highquality items to be driven out of the market

aggregate demand curve;  a curve that shows the different equilibrium levels of expenditures at different price levels

aggregate supply curve;  a curve that shows the amount of production at different price levels

antitrust laws ; rules of behavior prescribed by the government

Asian tigers;  Hong Kong, Korea, Singapore, and Taiwan; countries that globalized in the 1960s and 1970s and experienced fast economic growth

automatic stabilizer ; an element of fiscal policy that changes automatically as income changes

average revenue; per unit revenue, total revenue divided by quantity

average total costs (ATC);  total cost divided by the total output per unit costs, total costs divided by quantity