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  KEY TERMS
 

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A posteriori
A conclusion reached at by logical reasoning or proven hypothesis based on facts and figures or empirical data

A priori
Presumption made about the outcome even before performing an action. A conclusion based on gut feeling or beliefs and experiences.

Ability-to-pay principle
A form of taxation, where the tax is determined based on the ownership of resources and one's ability to pay the tax. The best example of this form is Progressive taxation system.

Absolute advantage
The ability to produce more using less resources over the counterparts either naturally or by technological advantages. A frequently used term in international trade.

Absolute poverty
It defines the minimum standard of living of an individual or a household surviving on just the basic necessities of life or lesser.

Abstraction
Extraction of Important and relevant information from an abstract idea, so as to ignore or reduce the less important or unimportant information.

Abstraction Methods
Various methods employed in extraction of important and relevant information. The important three are words, graphs and equations.

Accounting cost
The actual expenses incurred on a project or a production activity which are recorded in the books of accounts in a firm. This term is often cited to highlight the difference between Opportunity (economic) costs and the accounting costs.

Accounting profit
The difference between a firm's total revenue and its total accounting costs. Accounting profit is listed in the Balance Sheet.

Action lag
The time difference in the initiation of the action and implementation of the action.

Actual investment
The expenditure incurred on investments in a given period of time. This will include all planned and unplanned costs as well.

Accumulation
The process of acquiring more capital and wealth

Activist policy
A Government policy that ascertains a set of actions designed to achieve specific goals

AD
The total amount of good and services demanded in an economy at a given point in time.

Ad valorem
A tariff on imported goods which is in proportion to the value of the good.

Adam Smith
Popularly known as the Father or Economics, his "Wealth of Nations" laid the foundation to the classic free market economics.

AFC
Average Fixed Cost. This is calculated by dividing the total fixed costs by the total amount of output
agglomeration economies The advantage achieved over production costs due to the proximity among clusters of firms which are related with each other in some manner

Aggregate demand
The total amount of good and services demanded in an economy at a given point in time.

 

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