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85 Cards in this Set
- Front
- Back
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scarcity
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fundamental economic problem facing all societies that results from a combination of scarce resources and people's virtually unlimited wants
(pg. 5) |
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Economics
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The study of the economy, focused on $
study of how to fulfill people's basic NEEDS & unlimited WANTS with seemingly limited resources (pg. 6) |
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need
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Necessity for basic survival
-water -food -shelter (pg. 6) |
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want
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Something that is unnecessary to survival. Something you desire.
-electronics (pg. 6) |
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Factors of Production
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productive resources that make up the four categories of land, capital, labor, and entrepreneurship
(pg. 7) |
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Land
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natural resources or "gifts of nature" not created by human effort
(pg. 7) |
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Capital
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tools, equipment, and factories used in the production of goods and services; one of four factors of production
(pg. 7) |
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Human Capital
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skills/abilities each worker has
(pg. 16) |
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Financial Capital
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money used to buy the tools and equitment used in production
(pg. 7) |
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labor
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people with all their abilities and efforts; one of four factors of production, does not include the entrepreneur
(pg. 8) |
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Entrepreneur
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risk-taking individuals in search of profits; one of four factors of production
(pg. 8) |
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Production
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process of creating goods and services with the combination use of land, capital , labor , and entrepreneurship
(pg. 8) |
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Gross Domestic Product (GDP)
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dollar value of all final goods , services and structures produced in one year with labor and property supplied by a country's residents, regardless of where the production takes place; largest measure of a nation's income.
(pg. 9) |
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Good
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tangible economic product that is useful, relatively scarce, transferable to others; used to satisfy wants and needs
(pg. 12) |
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Consumer Good
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good intended for final use by consumers rather than businesses
(pg. 12) |
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Capital Good
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tool, equipment or other manufactured good used to produce other goods and services; a factor of production
(pg. 12) |
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Service
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work or labor performed for someone; economic product that includes haircuts, home repairs, forms of entertainment
(pg. 13) |
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Value
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somethings worth in dollars or cents
(pg. 13) |
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Utility
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usefulness
-A produce is useful if it satisfies a persons needs or wants (pg. 13) |
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Market
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meeting place or mechanism allowing buyer and sellers of an economic product to come together; maybe local, regional, national, or global.
EX: street market (pg. 14) |
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Wealth
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An accumulation of products that are
-tangible -useful -scarce -transferable (pg. 14) |
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Factor Market
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market where productive resources are bought and sold.
(pg. 14) |
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Product Market
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market where goods and services are offered for sale.
(pg. 14) |
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Productivity
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degree to which productive resources are used efficiently; normally refers to labor, but can apply to all factors of production.
(pg. 15) |
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Division of Labor
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division of work into a number of separate tasks to be performed by different workers; same as specialization.
(pg. 16) |
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Specialization
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assignment of tasks so that each worker performs fewer functions more frequently; same as division of labor.
(pg. 16) |
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Trade-off
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alternatives that must be given up when one is chosen rather than another.
(pg. 19) |
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Opportunity COst
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cost of the next best alternative use of money, time, or resources when one choice is made rather than the other.
(pg. 20) |
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Economic System
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organized way a society provides for the wants and needs of its people.
(pg. 33) |
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Traditional Economy
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economic system in which the allocation of scarce resources and other economic activity is the result of ritual, habit, or custom.
(pg. 34) |
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Command Economy
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economic system characterized by a central authority that makes most of the major economic decisions.
(pg. 35) |
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Market Economy
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economic system in which supply, demand, and price system help people make decisions and allocate resources; same as free enterprise economy.
(pg. 36) |
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Inflation
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rise in the general level of prices.
(pg. 43) |
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Fixed income
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income that doesn't increase even though prices go up.
(pg. 43) |
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Capitalism
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economic system in which private citizens own and use the factors of production in order to generate profits.
(pg. 46) |
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Free Enterprise
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economy in which competition is allowed to flourish with a minimum of government interference; EX: Merica
(pg. 46) |
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Voluntary Exchange
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act of buyers and sellers freely and willingly engaging in market transactions; characteristic of capitalism and free enterprise.
(pg. 47) |
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Private Property Rights
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fundamental feature of capitalism, which allows individuals to own and control their possessions as they wish; includes both tangible and intangible property.
(pg. 47) |
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Profit
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extent to which persons or organizations are better off at the end of a period than they were at the beginning; usually measured in dollars.
(pg. 48) |
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Profit Motive
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driving force that encourages people and organizations to improve their material well-being; characteristic of capitalism and free enterprise.
(pg. 48) |
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Competition
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the struggle among sellers to attract consumers while lowering costs.
(pg. 48) |
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Consumer Sovereignty
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role of consumer as ruler of the market when determining the types of goods and services produced.
(pg. 50) |
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Mixed Economy
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has market economy characteristics but government interference is present, but its purpose is to support the economy and its individuals.
(pg. 51) |
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Sole Proprietorship
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unincorporated business owned and run by a single person who has rights to all profits and unlimited liability for all the losses. Most common form of business in the united states.
(pg. 57) |
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Unlimited Liability
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requirement that an owner is personally and fully responsible for all losses and debts of a business; applies to proprietorship, general partnership.
(pg. 58) |
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Inventory
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stock of goods held in reserve; includes finished goods waiting to be sold and raw materials to be used in production.
(pg. 59) |
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Limited Life
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situation in which a firm legally ceases to exist when an owner dies, quits, or a new owner is added; applies to sole proprietorship and partnerships
(pg. 59) |
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Partnership
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incorporated business owned and operated by two or more people who share the profits and have unlimited liability for the debts and obligations of the firm; same as general partnership.
(pg. 60) |
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Limited Partnership
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form of partnership where one or more partners are not active in the daily running of the business, and whose liability for the partnership's debt is restricted to the amount invested in the business.
(pg. 62) |
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Bankruptcy
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court-granted permission to an individual or business to cease or delay payment on some or all debts for a limited amount to time.
(pg. 62) |
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Corporation
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form of business organization recognized by law as a separate legal entity with all the rights and responsibilities of an individual, including the right to buy and sell property, enter into legal contracts, sue and be sued.
(pg. 62) |
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Charter
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written government approval to establish a corporation; includes company name, address, purpose of business, number of shares of stock, and other features of the business.
(pg. 63) |
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Stock
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certificate of ownership in a corporation; common or preferred stock.
(pg. 63) |
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Dividend
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check paid to stockholders, usually quarterly, representing portion of corporate profits.
(pg. 63) |
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Common Stock
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e
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Preferred Stock
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e
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Bond
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formal contract to repay borrowed money and interest on the borrowed money to regular future intervals.
(pg. 64) |
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Principal
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amount borrowed when getting a loan or issuing a bond.
(pg. 64) |
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Interest
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payment made for the use of borrowed money; usually paid at periodic intervals for long-term bonds or loans.
(pg. 64) |
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Demand
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combination of desire, ability, and willingness to buy a product.
(pg. 89) |
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Law of Demand
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states that the quantity demanded of a good or service is inversely related with the price
-If the price of something goes up the demand goes down. The opposite will happen if the price decreases (pg. 91) |
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Marginal Utility
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the extra usefulness or satisfaction a person gets from buying more than one of the same product
(pg. 93) |
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Diminishing Marginal Utility
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the extra satisfaction we get from using additional quantities of the product begins to diminish
-eating ice cream |
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Income Effect
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change in quantity demanded because of a change in price alters consumers' real income
-When consumers receive more money and they feel more wealthy and are willing to spend more money (pg. 96) |
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Substitution Effect
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that portion of a change in quantity demanded due to a change in the relative price of the product.
(pg. 96) |
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Substitute
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products that can take the place of other products
EX: A car for a bike (pg. 98) |
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Law of Supply
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rule stating that more will be offered for sale at high prices than at lower prices.
(pg. 113) |
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Theory of Production
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theory dealing with the relationship between the factors of production and the output of goods and services.
(pg. 122) |
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Law of Variable Proportion
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if one input variable is changed and the other are kept the same, the output ail change quickly
(pg. 112) |
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Raw Material
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natural materials used in production
(pg. 123) |
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Marginal Product
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extra output due to the addition of one more unit of input.
(pg. 130) |
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Marginal Return
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e
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Stages of Production
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phases of production-increasing, decreasing, and negative returns.
(pg. 125) |
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Total/Marginal Cost
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(Total) variable plus fixed cost; all costs associated with production. (pg. 128)
(Marginal) extra cost of producing one additional unit of production (pg. 129) |
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Total/Marginal Revenue
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(Total) total receipts; price of goods sold times quantity sold. (pg. 130)
(Marginal) extra revenue from the sale of one additional unit of output. (pg. 130) |
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Break Even Point
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Total cost is equal to revenue.
(profit is zero) (pg. 131) |
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Transaction
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a agreement between a buyer and a seller to exchange goods
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Credit
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e
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Debt
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The sum of money that is owed or due to be paid
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Deleveraging
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e
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Recession
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decline in real GDP lasting at least two quarters or more.
(pg. 376) |
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Long-term Debt Peak
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e
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Asset
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properties, possessions and claims on others; usually listed as entries on a balance sheet.
(pg. 416) |
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supply
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The number of products a company makes
book's def. = schedule of quantities offered for sale at all possible prices in a market. (pg. 113) |
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complement
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extra things you can buy that will help or go with a main product.
EX: headphones and a smart phone & a charger and a phone (pg. 98) |
