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40 Cards in this Set
- Front
- Back
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What is Economics?
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Economics is the study of how people try to satisfy what appears to be seemingly unlimited and competing wants through the careflu use of relatively scarce resources
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What is Scarcity?
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Scarcity is the condition that results from society not having enough resources to produce all the things that people would like to have
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What are the 3 basic economic questions?
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What to produce? How to produce? For whom to produce?
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What are the 4 factors of production?
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Land, Capital, Labor and Entrepreneurs
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Definitons of the 4 factors of production?
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Land- gifts of nature
Capital- tolls, equipment, machinery, and factories used in productionof goods and services Labor- includes people w/ all their efforts & abilities Entreprenuers- individuals who start a new business or bring a product to the market |
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What are the money payments for the factors of production called?
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Individuals
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What is opprotunity cost?
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The cost of the next best alternative use of money, tiem or resources when 1 choice is made rather than another
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What is a PPF?
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A diagram representing various combonations of goods and/or services an economy can produce when all productive resources are fully employed
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What s a circular flow model?
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It represents the economy's flow
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What are the functions of the entrepreneur?
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They provide initiative that combines the resources of land, labor and capital into new products. Often thought of as being the driving force in an economy because they exhibit the abilitiy to start new business or bring new products in to the market
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Name the 3 types of economic systems
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Capitalism- production privatley owned, supply & demand determine prices, businesses are free to direct resources into profitable activities
Socialism- govt. owned & runs some of basic productive resources in order to distribute to meet social goals Communism- theoretcally, selfless society in whcn needs of the individuals are subservent to meet the needs of society, really is often a rigid comand type economy in which the state owns all economic goods |
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Name 3 types of businesses
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Sole proprietorship/proprietorship- a business owned & run by 1 person
Partnership- business jointly owned by 2 or more persons Corporation- form of business organization recognized by law as a serperate legal entity having all the rights of an individual |
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What are the goals of the American Free Enterprise?
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Economic efficency, economic equality, economic security, full employment, price stability, economic growth and future goals
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What is the Law of Demand?
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A rule stating that more will be demanded at lower prces & less at higher prices, inverse relationship between price & quantity demanded
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What is the Law of Supply?
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Rule stating that more will be offered for sale at high prices than at lower prices
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What is equilibrium, surplus and shortage?
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Equilibrium- situation which prices are relativiely stable & the quantity of goods or services supplied is = tp quantity demanded
Surplus- when the quantity supplied is greater than the quantity demanded at a given price Shortage- when the quantity demanded is greater than the quantity supplied at a given price |
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What is price ceiling and price floor?
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Price ceiling- max. leagl price that can be charged for a product
Price floor- lowest legal price that can be paid for a good or service |
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What does elastic and inelastic mean?
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Elastic- when a given change in price causes a relatively larger change in quantity demaded
Inelastic- a given change is price causes a relatively smaller change in the quanitiy demanded |
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What are the 3 questions regarding whether simething is elastic or inelastic?
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Can purchase be delayed? Are adequate subsititues avaliable? Does purchase use a large portion of income?
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What is unit elastic?
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A given change in prices causes a porportional change in quanitiy demaded
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What is microecomics?
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Branch of ecomony that deals with behavior and decision making by small units, such as individuals & firms
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What is marcoeconomics?
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Branch of economics that deals w/ economy as a whole, including: employment, GDP, inflation, economic growth & the distribution of income
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What are the 3 functions of money?
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Medium of exchange, a measure of value and a store of value
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What are the characteristics of money?
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Portable, divisible, durable, limited supply
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What is commodity money?
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Money that has alternative uses as a commodity; gunpowder, flour, corn
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Who is the chairman of the Federal Reserve?
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Ben Bernake
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What is inflation?
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Rise in the gerneral level of prices
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What is recession?
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Decline in real GDP lasting two quaters or more
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What is "easy" money and what is "tight" money?
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Easy- the Fed allows the money supply to gro and interest rates to fall
Tight- Fed risricts growth of the money supply which drives intrest rates up |
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Who was Adam Smith?
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Scottish economist, called the Father of Economics and creator of The Invisible Hand
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What was the theroy of the "Invisible Hand"
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Self Intrest
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What does the word "Laissez Faire" mean?
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Let it be
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What is the Law of Variable Proportions?
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Rule stating that short-run output will change as one input is varied while others are held constant
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Define merger
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Combonation of 2 or more businesses form a single firm
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What is horizontal and vertical merger?
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Horizontal- takes place when 2 or more firms that produces the same kind of product join forces
Vertical- firms involved in different steps of manufactoring or marketing join together |
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What does the word "utility" mean?
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Ability or capacity of a good or service to be useful and give satifaction to someone
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Define fixed costs, variable costs, total costs and marginal costs
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1) cost of production that dosent change when output changes
2) production cost that varies as output changes; labbor, energy, raw meat 3) variable plus fixed cost, all cost associated with production 4) extra cost of producing 1 additional limit |
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What was the Sherman Anti-Trust Act?
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"To protect trade and commerce against unlawful restraint and monopoly"
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What is a durable and non-durable good
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1) includes both capital goods and consumer goods
2) an item that lasts for less than 3 years when used on a regular basis |
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What is short run and long run
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1) period of production that allows producers to change only the amount of the variable input added labor
2) period of production long enough for producers to adjust the quantites of all their resources |
