Economics 100 Terms

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1. Economics

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1.The study of how people seek to satisfy their needs and wants by making decisions

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2.Scarcity

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Limited quantities of resources to meet unlimited wants

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3. Opportunity Costs

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The most desirable alternative given up as the result of a decision

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4. Trade Offs

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An alternative we sacrifice when we make a decision

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5. Entrepreneur

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Ambitious leader who combines land, labor, and capital to create and market new goods or services

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6. factors of production

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Land, labor, and capital; the three groups of resources that are used to make all goods and services

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7. Productions Possibility Curve

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A curve that shows alternative ways to use an economy’s resources

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8. Law of increasing costs

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As we shift factors of production from making one good or service to another, the cost of producing the second item decreases

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9. satey net

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Government programs that protect experiencing unfavorable conditions

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10. traditional economy

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Economic system that relies on habit, custom, or ritual to decide the questions of production and consumption of goods and services

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11. Market economy (free enterprise)

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Economic system in which decisions on production and consumption of goods and services are based on voluntary exchange in markets

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12. centrally planned economy

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Economic system in which the central government makes all decisions on the production and consumption of goods and services

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13.factor market

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Market in which firms purchase the factors of production from households

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14. product market

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The market in which households purchase goods and services that firms produce

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15. adam smith

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Man who devolved the idea of capitalism and is considered the “father of the free market. Wrote “The Wealth of Nations

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16. underutilization

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Using fewer resources than an economy is capable of using

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17. Gross Domestic product (GDP)

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The total value of all final goods and services produced in a particular economy; the dollar value of all final goods and services produced within a country’s borders in a given year

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18. business cycle

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A period of macroeconomic expansion followed by a period of contraction

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19. public good

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A shared good or services for which it would be impractical to make consumers pay individually and o exclude non-payers

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20. free rider

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Someone who would not choose to pay for a certain good or device but who receives the benefits of it anyway if it were provided as a public good

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21. market failure

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A situation in which the market does not distribute resources efficiently

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22. externality (pos/neg)

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An economic side effect of a good or service that generates benefits or costs to someone other than the person deciding how much to produce or consume

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23. in-kind-benefits

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Goods and services provided for free or at greatly reduced prices

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24. law of demand

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Economic law that states that when its demans decreases and less when its price increases

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25. inelastic demand

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not done

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26. inferior good

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A good that consumers demand less of when their income increases

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27. normal good

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A good that consumers demand more of when their income increases

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28. complements

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Two goods that are brought and used together

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29. law of supply

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Tendency of suppliers to offer more of a good at a higher price

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30. inelasic supply

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A firm that cannot change its output level easily

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31. quota

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A set limit of output

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32. Tariff

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A tax on imported goods

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33. subsidy

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A government payment that supports a business or a market

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34.fixed cost

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A cost that does not change no matter how much is produced

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35.variabe cost

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A cost that increases or decreases depending on the amount made

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36. total cost

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Fixed plus variable cost

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37. total revenue

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not done

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38. marginal product of labor

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The change in output from hiring one additional unit of labor

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39.marinal revenue

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The additional income from selling one more unit of a good; sometimes equal to price

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40. excise tax

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A tax on the production or sale of a good

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41. marginal product of labor

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The change in output from hiring one additional unit of labor

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42. regulation

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Government intervention in a market that affects the production of a good

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43. incresing marginal returns

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A level of production in which the marginal product of labor increases as the number of workers decrease

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44. decresing marginal returns

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A level of production in which the marginal product of labor decreases as the number of workers increase

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45. equlibrium

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The point at which quantity demanded and quantity supplied are equal

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46. proce ceiling

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A maximum price that can be legally charged for a good or service

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47. price floor

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A minimum price for a good or service

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48. surplus

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Situation in which quantity supplied is greater than the quantity demanded

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49. shortage

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A situation in which a good or service is unavailable or when quantity supplied is less than the quantity demanded

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50. supply shock

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A sudden shortage of a good

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51. spillover costs

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Cost of production that affects people who have no
control over the amount of a good

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52. black market

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Market in which goods are sold illegally

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53. perfect competition

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Large number of firms where all sell the same good

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54. barrier to entry

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Any factor that makes it difficult to enter a market

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55. commodity

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Product that is the same in all places, such as petroleum, or notebook paper

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56. monopoly

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Market dominated by a single seller

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57. economies of scale

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Factors that cause cost per unit to fall as output rises

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58. natural monoply

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A market that runs most efficiently when one large firm supplies output

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59. monopolistic competition

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Market structure in which many companies sell products that are similar but not identical

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60. oligopoly

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Market structure in which a few large firms dominate the market

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61. sole proprietorship

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A business owned and managed by a single individual.

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62. partnership

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A business organization owned by two
Or more persons who agree on a specific
Division of responsibilities and profits.

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63. corporation

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A legal entity owned by individual
Stockholders.

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64. publicly-held corporation

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Corporation that sells stock on the
Open market

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65. asset

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Money and other valuables belonging
To an individual or business.

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66. liability

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The legally bound obligation to
Pay debts.

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67. horizontal merger

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The combination of two or more firms
Competing in the same market with the
same good or service

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68. verticle merger

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The combination of two or more firm.Involved in different stages of producing
The same good or service.

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69. cooperative

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A business organization owned
And operated by a group of individuals
For their mutual benefit.

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70. conglomerate

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Business combination merging more
Than three businesses that make the
Unrelated products.

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71. multinational

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A large corporation that produces and
Sells its goods and services throughout
The world.

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72. labor union

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An organization of workers that tries
To improve working conditions, wages,
And benefits for its members.

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73. collective bargaining

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The process in which union and
Company representatives meet to
Negotiate a new labor contract

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74. stock

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A certificate of ownership in a
Corporation.

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75. bond

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A formal contract to reply borrowed
Money with interest at fixed intervals.

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76. mutual fund

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Fund that pools the savings of many
Individuals and invests this money in a
Variety of stocks, bonds, and other financial
Assets.

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77. diversifcation

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Spreading out investments to reduce risk.

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78. blue chip stock

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A "blue chip" is the nickname for a stock that
is thought to be safe, in excellent financial
shape and firmly entrenched as a leader in its field.
Blue chips generally pay dividends and are
favorably regarded by investors.

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79. recession

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A prolonged economic contraction.

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80. depression

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A recession that is especially long and
Severe.

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81. depreciation/ appreciation

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(Deprecation) The loss of the value of
Capital equipment that results from
Normal wear and tear or, a decrease in
The value of a currency. (Appreciation)
An increase in the value of a currency.

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82. frinctional unemployment

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Unemployment that occurs when people
Take time to find a job.

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83. structural unemployment

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Unemployment that occurs when workers’
Skills of not match the jobs that are
Available

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84. cyclical unemployment

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Unemployment that rises during economic
Downturns and falls when the economy
Improves

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85. seasonal unemployment

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Unemployment that occurs as a result of
Harvest schedules or vacations, or when
Industries slow or shut down for a season.

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86. underemployment

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Working at a job for which one is overqualified,
Or working part-time when full-time work is
Desired.

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87. workfare

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A program requiring work and purposeful activity;
System of values that gives central importance to work

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88. entitlement

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Social welfare program that people are “entitled”
To if they meet certain eligibility
Requirements.

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89. expenditure

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The act of a country spending money

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90. supply-side economics

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a school of economics that believes tax
Cuts can help an economy by raising
Supply.

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91. monetary policy

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The actions the Federal Reserve takes to
Influence the level of GDP and the rate
Of inflation in the economy.

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92. interest rate

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A rate which is charged or paid
for the use of money.

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93. import

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A good that is brought in from another
Country for sale.

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94. export

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A good that is sent to another country
For sale

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95. European Union

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A regional trade organization made up
Of European nations.

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96. trade surplus

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The result of a nations exporting more
Than it imports.

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97. trade deficit

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The result of a country’s importing
More than it exports.

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98. absolute advantage

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The ability to produce more of a given
Product using a given amount of
Resources.

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99. comparative advantage

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The ability to produce a product most
Efficiently given all the other products
That could be produced.

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100. balance of trade

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The relationship between a nations’
Imports and exports.