Appendix 1
Appendix 2 (a)
Appendix 2 (b)
A Basic Glossary of Economic Terms
Choice Set - in the context of economic analysis of projects, it refers to all the projects that are being evaluated for use of limited capital funds.
Demand Curve or Schedule - the relation between the price of a good or service and the quantity demanded.
Diminishing Marginal Utility - the generalization, sometimes called a law, that the more you have of anything (e.g. goods, services, money), the less important is any one unit of it.
Discounting - reducing an uncertain future economic value to an equivalence with a certain current economic value.
Distribution of Income - the proportion of low, medium and high incomes in a society, i.e. a measure of economic equity.
Economic Surplus - composed of consumer surplus to buyers and producer surplus to sellers. The difference between the maximum amount of money a consumer is willing to pay and what is actually paid. Alternatively, it refers to the difference between what factors of resource owners (e.g. producers) earn in current use and the minimum sum they would be willing to accept.
Elasticity - the relationship between the percent change in quantity of a good or service demanded or supplied and the percent change in price of the good or service.
Equity Capital - the debt free assets which are owned by a given individual or group of individuals.
Externality - an incidental, third party or external effect from economic production or consumption activity which Is not accounted for by the market price.
Foreign Exchange - currency (or other financial instruments) that can be used to pay international debts.
Opportunity Cost - the value of the foregone or sacrificed opportunity, i.e. the economic value of resources in their highest value use.
Property Rights - Description of the relationship of one person to another with respect to a resource or line of action. Property is the right, and not the object over which the right extends.
Social Time Preference - Incorporating a concern for future generations in the determination of an optimal discount rate.
Shadow Price or Value - the equivalent price or social value to that generated by people buying and selling goods and services (Including foreign exchange) In a market with no Imperfections or distortions.
Supply Curve or Schedule - the relation between the price of a good or service and the amounts that producers are willing to supply.
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