Economics, 3rd Edition

perfect complements 

two goods with right-angle indifference 

curves

perfect price discrimination 

a situation in which the 

monopolist knows exactly the willingness to pay of each 

customer and can charge each customer a different price

perfect substitutes 

two goods with straight-line indifference 

curves

permanent income 

a person’s normal income

Phillips curve 

a curve that shows the short-run trade-off 

between inflation and unemployment

physical capital 

the stock of equipment and structures that are 

used to produce goods and services

Pigovian tax 

a tax enacted to correct the effects of a negative 

externality

planned spending, saving or investment 

the desired or 

intended actions of households and firms