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112 Cards in this Set
- Front
- Back
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something like air, food, or shelter that is necessary for survival
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need
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an item that we desire but that is not essential to survival
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want
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the study of how people seek to satisfy their needs and wants by making choices
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economics
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physical objects such as clothes or shoes
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goods
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actions or activities that one person performs for another
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services
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limited quantities of resources to meet unlimited wants
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scarcity
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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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factors of production
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a situation in which a good or service is unavailable
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shortage
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natural resources that are used to make goods and services
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land
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the effect that people devote to a task for which they are paid
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labor
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any human-made resource that is used to create other goods and services
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capital
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all human-made goods that are used to produce other goods and services; tools and buildings
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physical capital
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the skills and knowledge gained by a worker through education and experience
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human capital
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ambitious leader who combines land, labor, and capital to create and market new goods and services
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entrepreneur
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and alternative that we sacrifice when we make a decision
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trade-off
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a phrase that refers to the trade-offs that nations face when choosing whether to produce more or less military or consumer goods
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guns or butter
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the most desirable alternative given up as the result of a decision
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opportunity cost
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decision whether to do or use one additional unit of some resource
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thinking at the margin
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a graph that shows alternative ways to use an economy's resources
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production possibilities curve
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the line on a production possibilities graph that shows the maximum possible output
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production possibilities frontier
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using resources in such a way as to maximize the production of goods and services
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efficiency
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using fewer resources than an economy is capable of using
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underutilization
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to an economist, the alternative that is given up because of a decision
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cost
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law that states that as we shift factors of production from making one good of service to another, the cost of producing the second item increases
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law of increasing costs
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the method used by a society to produce and distribute goods and services
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economic system
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the income people receive for supplying factors of production, such as land, labor, or capital
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factor payments
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the love of one's country; the passion that inspires a person to serve his or her country
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patriotism
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govt. programs that protect people experiencing unfavorable economic conditions
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safety net
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level of economic prosperity
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standard of living
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economic system that relies on habit, custom or ritual to decide questions of production and consumption of goods and services
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traditional economy
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economic system in which decisions on production and consumption of goods and services are bases on voluntary exchange in markets
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market economy
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economic system in which the central govt. makes all decisions on the production and consumption of goods and services
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centrally planned economy
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economic system in which a central authority is in command of the economy; a centrally planned economy
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command economy
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market-based economic system with limited govt. involvement
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mixed economy
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an arrangement that allows buyers and sellers to exchange things
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market
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the concentration of the productive efforts of individuals and firms on a limited number of activities
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specialization
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a person or group of people living in the same residence
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household
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an organization that uses resources to produce a product which it then sells
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firm
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market in which firms purchase the factors of production from households
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factor market
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the financial gain made in a transaction
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profit
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the market in which households purchase the goods and services that firms produce
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product market
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one's own personal gain
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self-interest
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an expectation that encourages people to behave in a certain way
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incentive
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the struggle among producers for the dollars of consumers
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competition
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term economists use to describe the self-regulating nature of the marketplace
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invisible hand
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the power of consumers to decide what gets produced
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consumer sovereignty
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a social and political philosophy based on the belief that democratic means should be used to evenly distribute wealth throughout a society
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socialism(OBAMA)
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a political system characterized by a centrally planned economy with all economic and political power resting in the hands of the central govt.
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communism
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requiring strict obedience to an authority, such as a dictator
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authoritarian
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large farm leased from the state to groups of peasant farmers
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collective
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industry that requires a large capital investment and that produces items used in other industries
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heavy industry
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the doctrine that states that govt. generally should not intervene in the marketplace
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laissez faire
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property owned by individuals or companies, not by the govt. or the people as a whole
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private property
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an economic system characterized by private or corporate ownership of capital goods;investments that are determined by private decision rather than by state control; and determined in a free market
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free enterprise
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a range with no clear divisions
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continuum
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period of change in which an economy moves away from a centrally planned economy toward a market-based system
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transition
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to sell state-run firms to individuals
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privatize
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the force that encourages people and organizations to improve their material well-being
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profit motive
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the concept that everyone can compete in the marketplace
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open opportunity
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the concept of giving everyone the same legal rights
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legal equality
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the concept that people have the right and privilege to control their possessions as they wish
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private property rights
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the concept that people may decide what agreements they want to enter into
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free contract
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concept that people may decide what and when they want to buy and sell
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voluntary exchange
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the rivalry among sellers to attract customers while lowering costs
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competition
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a private organization that tries to persuade public officials to act or vote according to group member's interests
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interest groups
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laws requiring companies to provide full information about their products
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public disclosure laws
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the concerns of the public as a whole
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public interest
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the study of the behavior and decision making of entire economies
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macroeconomies
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the study of the economic behavior and decision making of small units, such as individuals, families, and businesses
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microeconomics
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the total value of all final goods and services produced in a particular economy
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gross domestic product (GDP)
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a period of macroeconomic expansion followed by a period of contraction
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business cycle
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a commitment to the value of work and purposeful activity
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work ethic
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the process used to produce a good or service
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technology
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a shared good or service for which it would be impractical to make consumers pay individually and to exclude non-payers
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public good
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the part of the economy that involves the transactions of the government
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public sector
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the part of the economy that involves the transactions of the individuals and businesses
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private sector
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someone who would not choose to pay for a certain good or service, but who would get the benefits of it anyway if it were provided as a public good
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free rider
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a situation in which the market does not distribute resources efficiently
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market failure
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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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externality
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an income level below that which is needed to support families or households
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poverty threshold
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government aid to the poor
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welfare
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direct payments of money to eligible poor people
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cash transfers
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goods and services provided for free or at greatly reduced prices
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in-kind benefits
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An example of a shortage is limited amounts of
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food available because the trucks carrying it are on strike
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What types of decisions can be made at the margin?
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whether to grow beans or corn on a large farm, whether or not to hire 100 new workers, and whether to leave early in the morning or late in the day for a trip
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An efficient economy is one that
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uses its resources to make the most goods and services
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Why are all goods and services scarce?
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all resources are scarce
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What is a factory building an example of?
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physical capital
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How would you describe an economy that uses its resources to make the greatest possible number of goods and services?
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efficient
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One example of an entrepreneur is
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an artist who runs a business painting murals in office buildings and restaurants
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What can a decision-making grid do?
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help you determine some of the opportunity costs for your decision
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What can show up on a production possibilities curve?
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the efficiency of an economy, whether an economy has grown or shrunk, and the opportunity cost of a decision to produce more of one good or services
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A company that makes baseball caps is underutilized its resources. What does this mean?
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the company is producing fewer caps than it could be
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What are the characteristics of a centrally planned economy?
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The central government owns all land and capital, the central government makes all economic decisions, and each person is assigned a job
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What does the process of specialization do for an economy?
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it makes it more efficient
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What is one of the most important advantages of a free market?
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it encourages growth
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What is the product market?
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the market in which households purchase the goods and services that firms produce
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What is the function of an economic system?
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to produce and distribute goods and services
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What is not a condition that most people would expect the safety net of the government to provide for?
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low income
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Who was the leafer that introduced communism and central planning to the former Soviet Union?
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Vladimir Lenin
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You are an entrepreneur with an innovative idea for a new business. In which kind of economy would you have the most opportunity to try to achieve success?
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market economy
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A person believes that real equality can only exist when political equality is coupled with economics equality. This person believes that democratic means should be used to distribute wealth evenly throughout society. This person is a...
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socialist
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The economy of China is in transition. What does this mean?
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the economy is moving from central planning toward a market-based system
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What is a private organization that attempts to influence public officials to act or vote in ways that will benefit the group's members?
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interest group
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What is one benefit provided by Social Security?
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retirement income for the elderly
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A person who consumes a good or service but does not pay for it is called what?
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a free rider
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Automakers are required to comply with public disclosure laws. What is one example of a requirement of these laws?
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Car dealers must prominently display a sticker with the fuel efficiency in the car window
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Why is legal equality important to the free enterprise system?
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Guaranteeing all people the same legal rights will maximize the use of human capital
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Why does the government protect inventors and authors by offering them patents and copyrights?
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to promote innovation
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What is an example of a public good?
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highway system
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Each payday, some of your pay is withheld as payroll deductions for Social Security. What happens to the money that is withheld?
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It is redistributed as cash transfers to elderly and disabled people
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Jeff and Margaret qualify for Section 8 housing, a subsidized housing program from the federal government. What kind of benefit are they receiving?
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in-kind benefit
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