personal distribution of income:The way that income is shared among people in a particular economic system.
personal income tax:A tax on the income of individuals.
population: The amount of individuals in a particular economic system.
positive externality:The result when benefits are shifted to people who are not directly involved with the production
or consumption of a good.
poverty:The condition in which people do not have enough income to provide for their basic needs, such as food,
water, shelter, and clothing.
price ceiling:A maximum price set by government that is below the market equilibrium price.
price elasticity of demand:The ratio or percentage change in quantity demanded relative to the change in price that
caused the change in quantity demanded.
price elasticity of supply:The ratio of the percentage change in the quantity supplied to the percentage change in the
product price.
price floor:A minimum price set by the government that is above the market equilibrium price.
price index:A number that compares prices in one year with some earlier base year.
price setter:A firm that has some control over the price at which its product sells.
price support program:A government program designed to keep prices from falling below some level the government
decides is fair.
price taker:A firm that takes a price determined by forces outside the firm’s control.
prime rate:The interest rate that banks charge their best corporate customers.
private enterprise:A system in which private individuals take the risk of producing goods or services to make a profit.
private goods:Goods that are privately owned to benefit only their owners.
private sector:The part of an economy that is owned by private individuals and operated for their personal benefit.
product differentiation:The concept that the product of one firm can be distinguished from the products of other firms.
production possibilities curve:A graphic illustration of the combination of output an economy can produce if all of its
resources are utilized efficiently, given the state of technology.
profit:Total revenue minus total costs.
progressive rights:The rights that define who owns what rights to property and how individuals or groups may use
their property.
progressive tax:A tax that takes a larger percentage of higher incomes and a smaller percentage of lower incomes.
property tax:A tax levied on real estate, such as a home, land, and buildings.
proportional tax:A tax that takes the same percentage of income from all taxpayers.
proprietorship:A form of business in which one individual owns the entire business.
protectionism:The idea that we should limit trade to protect our own self-interest.
psychic income:The nonmonetary reward we get from taking some action.
Glossary
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