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30 Cards in this Set
- Front
- Back
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Microeconomics
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the study of producers & consumers in one particular market (small scale -individuals, households or businesses - )
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Macroeconomics
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the study of how all parts of an economy work together (large scale - behavior & decision-making of Governments or Corporations)
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Households
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groups of people that live together & purchase goods to be shared by everyone in the group
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Circular Flow Diagram
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a diagram showing the flow of money & resources from businesses to households and vice versa. Transactions take place in the Product or Factor Market. Outside ring moves clockwise and stands for money while inside ring moves counterclockwise & stands for physical flow of productive resources (land , labor & capital)
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Factor Market
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all the exchanges that businesses must make in order to produce goods or services
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Product Market
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market in which consumers purchase goods & services produced by businesses
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Rent
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payment a business makes for use of land resources
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wages
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payment a business makes to workers
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Interest
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1. payment a firm makes to obtain capital 2. money earned for savings/investments, expressed as a percentage of the original deposit 3. cost of credit, expressed as a percentage of the amount of money a business earns after paying all the costs of production
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Profits
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amount of money a business earns after paying all the costs of production
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Barter
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a situation in which people trade goods & services without using money
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Medium of Exchange
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Money; or anything accepted as payment for goods & services
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Standard of Value
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the use of prices to compare the economic value of different goods & services
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Store of Value
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a characteristic of money that allows us to save it and spend it later; it holds its value over time
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Law of Supply
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the higher the price a company can charge, the more it is willing to supply
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Law of Demand
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the higher the price of an item, the lower the demand for it will be
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Supply Curve
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graph showing the relationship between price and supply
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Demand Curve
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graph that shows the relationship between price and demand
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Market Clearing Price
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the price at which a producer will be able to sell his entire supply, and consumers will be able to buy the exact amount they want
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Equilibrium Price
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the price at which a producer will be able to sell his entire supply, and consumers will be able to buy the exact amount they want
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Demand Elasticity
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a situation in which the demand is sensitive to price change
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Demand Inelasticity
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a situation in which demand is not sensitive to price changes
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Price Floor
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minimum allowable price by law that can be charged for a particular good or service ( ex. minimum wage)
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Profit Motive
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the ability of entrepreneurs to earn money, which motivates them to create new goods & services
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Sole Proprietorship
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type of business that has a single owner, who takes all the risks and receives all profits
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Unlimited Liability
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a situation in which a business owner is responsible for all the business debts
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Perfect Competition
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a market structure in which a large number of firms all produce the same product ( ex. farmers selling wheat or corn at Farmer's Market)
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Monopoly
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a market dominated by a single seller
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Monopolistic Competition
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a market structure in which many companies sell products that are similar but not identical; uses advertising, image or status to sell products
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Oligopoly
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a market structure in which a few large firms dominate a market ( ex. Car industry controlled by GM, Ford & Chrysler in USA)
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