Here are Economics Terms beginning with P

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Paradox of value refers to the puzzle of why essential items such as water are cheap while non essential items such as diamonds are expensive. The paradox can be resolved by distinguishing between total and marginal value.

Pareto criterion suggest that a policy change is desirable of it leaves at least one person better off and no one else worse off.

Pareto improvement is a situation in which at least one economic agent is made better off without making any other economic agent worse off.

Pareto optimal is a situation in which it is impossible to make someone better off without making someone else worse off.

Participation rate is the percentage of the working age population that is part of the workforce in that they are either employed or actively looking for work. During a recession many workers often get discouraged and stop looking for employment which reduces the participation rate.

Partnership is a business arrangement in which two or more people people share the profits of the business but have unlimited liability should the business get into difficulty.

Peak load pricing is a system of price discrimination whereby a higher price is charges during peak hours and a lower price in off peak hours.

Perfect competition is a market structure where there are many firms selling an identical product and many consumers, there are no barriers to entry and exit and the firms are all price takers. In such a structure the firms will only make normal profits in the longer run.

Phillips curve is a curve that showed the relationship between money wage growth and the rate of unemployment over the period 186-1957. It has since been widely used in economics to depict a negative relationship between the rate of inflation and rate of unemployment.

Picketing is used to describe a situation whereby people on strike gather at the entrance to a workplace and try to persuade those not on strike to join the strike or not to make deliveries and also to draw publicity to the strike.

Plant specific economies of scale are economies of scale that are positively related to the size of a factory. It is often cheaper to have one plant rather than a multi-plant organisation.

Point price elasticity of demand is the price elasticity of demand at a particular point on the demand curve for small changes in the price. It is given by the formula (dQ/dP) x (P/Q).

Poll tax a lump sum tax per taxpayer. It is a fixed amount per taxpayer regardless of their level of income or wealth.

Polluter pays principle is the principle that the polluter pays for the costs of cleaning up the pollution that they have created. This is usually achieved by a green tax or through having to pay for permits giving the polluter the right to pollute.

Pooling of risks is a system of risk management use by insurance companies, which involes pooling different types of risks into a portfolio and increasing the number of policies so as to make the risks more predictable.

Positive economics invloves generating predicitions from an economic theory and testing them empirically. Since a predition can be emprirically accepted or rejected by empirical tests it is said to be value free.

Post Keynesian economics is a school of economic thought that builds upon the work of John Maynard Keynes. The school argues that economies have no automatic tendency to achieve full employment. Accroding thePOst Keynesian Economics Study Group "Post Keynesian economics is defined broadly as a theoretical approach that draws  upon the work of Keynes, Kalecki, Joan Robinson, Kaldor, Kahn and Sraffa. This
approach is distinguished by the central role of the principle of effective  demand (that demand matters in the long run) and an insistence that history, social structure and institutional practice be embodied in its theory and reflected in its policy recommendations. "

Potential growth refers to the  annual percentage increase in the podructive capacity of an economy to produce more goods and services.

Poverty trap for an individual refers to a situation when poor people are discouraged from taking up a job because the amount of benefits and social security that they will lose may be greater of so similar to their after tax wage so that taking a job is not worthwhile.

Poverty trap for a country refers to a situation where a developing country is so poor that it has insufficient savings to generate sufficint oppportunity to achieve an increase in real per capita national income.

Predatory pricing refers to a situation where a firm deliberately charges a price below its average cost of production in a bid to drive its cometitors out of business.

Preferential Trading Arrangement (PTA) is a trading arrangement between two or more countries in which they have freer trade among themselves than with non member countries. Examples include the North American Free Trade Area and and the European Union.

Present value of an investment desribes the value of cash flows from an investment in terms of the its current value. The formula is given by:

PV = CF
       (1+r)n

Where:
CF is the cash flow in future periods, r is the required rate of return and n is the number of periods.

Price discrimination occurs when a firm sells its product or service to different groups customers at different prices for reasons not associated with differences in cost. 

Price elasticity of demand (point method) shows the percentage change in the quantity of a good demanded divided by the percentage change in the price of the good. The measure is valid for small changes in the price.

Price elasticity of demand (arc method) shows the percentage  change in the quantity of a good demanded (using the average if the inital and final quantity) divided by the percentage change in the price of the good (using the average of the initial and finance price). The measure is used for larger changes in the price.

Price elasticity of supply (point method) shows the percentage  change in the quantity of a good supplied divided by the percentage change in  the price of the good. The measure is valid for small changes in the price.

Price elasticity of suppy (arc method) shows the percentage change in the quantity of a good supplied  (using the average if the inital and final quantity) divided by the percentage change in the price of the good (using
the average of the initial and finance price). The measure is used for larger changes in the price.

Price mechanism is the system whereby changes in suppply and demand for a product or service result in changes in prices.

Price taker (Price taking) a firm that is unable to influence the price of a products as it is too small. Undder perfect competition all firms are assumed to be price takers.

Price-cap regulation a system of price regulation whereby the price of a good is set by a regulator that also has the power to decide any prices rises will be allowed.

Price consumption curve is a curve showing how an individual's optimum consumption of two good will change as the price of one of the goods changes while the price of the other good and the individual's income is held constant.

Prices and incomes policy is a government policy that attempts to control the rate of inflation by getting firms and workers to agree to constrain wage and price rises. It may be a voluntary policy or could be enforced through making it a legal requirement.

Primary market the market where securities are sold when first issued.

Principal agent problem is an agency dilemma which concerns the difficulties in motivating one party (the "agent"), to act on behalf of another (the "principal"). For example, the owners of a firm (the principals) may have problems motivating the managers (the agents) to act in their interests such as pursuing maximum profits.

Principle of cumulative causation is when an initial shock or event causes an ultimate event that is far larger. A good example is the Keynesian multiplier whereby an initial increase in government expenditure leads to a far larger eventual increase in the national income.

Prisonners dilemma is famous example in Game Theory in which two players in a game by maximising their own individual utility independently both end up worse off than if they were to cooperate.

Private efficiency is a situation where an individual's marginal benefit from an action are eual to the marginal costs of that action.

Private limited company is a privately owned company where the owners have limited liability.

Producer surplus the difference betwen what a producer is willing to supply a good or service at and the price actually achieved. For example if a producer is willing to supply Good X at $6 but actually receives $10 then the producer surplus is $4.

Product differentiation occurs when the product or service of a firm is sufficiently different from that of its competitors that it can raise its price and not lose all its customers.  As such, the firm faces a downward sloping demand curve for its product.

Production refers to the process of turning inputs in the form of capital, labor, land (natural resources) and entrepeneurship into to a product or service.

Production function is a mathematical relationship between the inputs and outputs in the production process. As such, it will show the increase in production from resulting changes in one or more of the inputs.

Production possibility curve (or frontier) shows the various maxmium levels of production of of two or more goods that an economy can achieve given its factors of prouduction at given point in time. All points on the production possibility curve represent points of maximum efficiency combined with full employment of the economy's factors of production.

Productive efficiency occurs when a firm is getting the maximus possible output from its inputs of labour, capital, land into the production process. As such it achieves it will be producing the good or service at the least cost.

Productivity refers to the output of a factor of production relative to the input of the factor of production a rise in the ratio of outputs to inputs mneans greater average productivity.

Profit satisficing occurs when the managers or owners of a firm are content woith just satisfactory profits rahter then the profit maximising output.

Profit maximising occurs when the firm produces at an output where the gap between its total revenue and total costs is at its maximum possible level. This output level is reached when the firm equates its marginal reveunie to its marginal cost.

Progressive tax is a tax that takes up an increasing percentage of your income as your income rises.

Proportional tax is a tax that takes a constant percentage of your income as your income rises.

Prudential control refers to central banks requiring that recognised commercial banks maintain adequate capital reserves and liquidity.