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.Glossary23 53999X Gloss.qxd 1/23/04 10:31 AM Page 255