Econ Test 1

Front 1

Command System

Back 1

A method of organizing an economy in which property resources are publically owned and govt uses central economic planning to direct and coordinate economic activities. Command economy, communism

Front 2

Market System

Back 2

All the product and resource market of a market economy and the relationships among them; A method that allows the prices determined in those markets to allocate the economy's scarce resources and to communicate and coordinate the decisions made by consumers, firms, and resource suppliers.

Front 3

Private Property

Back 3

The right of private persons and firms to obtain, own, control, employ, dispose of, and bequeath land, capital, and other property.

Front 4

Freedom of Enterprise.

Back 4

The freedom of firms to obtain economic resources, to use those resources to produce products of the firms own choosing, and to sell their products in market of their choice.

Front 5

Freedom of Choice

Back 5

The freedom of owners of property resources to employ or dispose of them as they see fit, of workers to enter any line of work for which they are qualified, and of consumers to spend their incomes in any manner they think is appropriate.

Front 6

Self- Interest

Back 6

That which each firm, property owner, worker, and consumer believes in best for itself and seeks to obtain.

Front 7

Competition

Back 7

The presence in the market of independent market of buyers and sellers competing with one another along with the freedom of buyers and sellers to enter and leave the market.

Front 8

Market

Back 8

Any institution or mechanism that brings together buyers (demander) and sellers (suppliers) of a particular good or service .

Front 9

Specialization

Back 9

The use of the resources of an individual,a firm, a region, a nation to concentrate production on one or a small number of goods and services.

Front 10

Division of Labor

Back 10

The separation of the work required to produce a product into a number of different tasks that are preformed by different; specialization of workers

Front 11

Medium of Exchange

Back 11

Any item sellers generally accept and buyers generally use to pay for goods or services; money; a convenient way of exchanging goods and services without engaging in barter.

Front 12

Barter

Back 12

The exchange of one good or service for another good or service.

Front 13

Money

Back 13

Any item that is generally acceptable to sellers in exchange for goods and services.

Front 14

Consumer Sovereignty

Back 14

Determination by consumers of the types and quantities of goods and services that will be produced with the scare resources of the economy; consumers direction of production through their dollar votes.

Front 15

Dollar Votes

Back 15

The votes that consumers and entrap. cast for the production of consumer and capital goods, respectively, when they purchase those goods in product and resource markets.

Front 16

Creative Destruction

Back 16

The hypothesis that creation of new products and production methods simotaniously
destroys the market power of existing monopolies

Front 17

"Invisible Hand"

Back 17

The tendency of firms and resource suppliers to seek to further their own self interest in competitive market to also promote the interest of society.

Front 18

Resource Market

Back 18

A market in which households sell and firms buy resources or the services of resources.

Front 19

Product Market

Back 19

A market in which products are sold by firms and bought by households.

Front 20

Demand

Back 20

A schedule showing the amounts of a good or service that buyers (or a buyer) wish to purchase at various prices during some time period.

Front 21

Demand Schedule

Back 21

See demand.

Front 22

Law of Demand

Back 22

The principle that, other things equal, an increase in product's price will reduce the quantity of it demanded and conversely for a price decrease.

Front 23

Diminishing Marginal Utility

Back 23

More ice cream u eat....warheads

Front 24

Income Effect

Back 24

A change in the quantity demanded of a product that results from the change in real income. (Purchasing power caused by change in products price)

Front 25

Substitution Effect

Back 25

(1) A change in the quantity demanded of a consumer good that results from a change in its relative expensiveness by the change in the products price
(2) The effect of a change in the price of the resource on the quantity of the resource employed by a firm, assuming no change in it's output.