S. Cons Econ-units 1 & 2
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57 terms
Terms | Definitions |
|---|---|
 capitalism | an economic system based on the private ownership of property that is operated for proft |
| technology | a scientific way of producing goods and services |
| productivity | a measure of how effectively workers are working |
| division of labor | a method of production in which different people do different parts of a task |
| consumer | a person who uses a product or service |
| monopoly | the complete ownership of a market by one seller |
| currency | paper money and sometimes coins |
| profit | money made from a business after all bills have been paid |
| credit | the ability to buy something with a promise to pay later |
| opportunity cost | whatever a person cannot have because he/she has spent resources on something else |
| boycott | a refusal to buy a product or service |
| nondurable goods | goods that can only be used for a short time |
| durable goods | goods that can be used over and over |
| scarcity | a condition of limited resources |
| capital | physical items such as money or goods that help workers produce wealth |
| competition | the effort of two or more sellers to attract the business of a buyer by offering the best terms |
| inelastic demand | a demand that does not change with price |
| rate of inflation | a percentage that shows how fast the dollar is losing its value |
| profit | the difference between total income and total costs |
| Consumer Price Index | measures how the cost of goods and services changes |
| supply | the amount of goods and servce producers are willing to sell at all possible prices at a given time |
| inflation | a rise in the overall level of prices |
| demand | the amount of a good or service that consumers are willing to buy at all possible prices at a given time |
| fixed income | income that does not rise with inflation |
| elastic demand | a demand that varies with price |
| cost of living | the price of most goods and services |
| demand-pull inflation | buyer inflation; when demand goes up faster than supply |
| cost-push inflation | seller's inflation; when cost of making a product goes up |
| price-wage spiral | cycle in which increased wages result in increased prices which result in a demand for increased wages etc |
| economics | science that studies why and how goods are produced and used |
| trade-off | the act of choosing which things are most wanted |
| resources | the supply of things that people have to fill their needs |
| microeconomics | the study of the small details of the economy |
| macroeconomics | the study of the economy as a whole |
| barter | to exchange one thing of value for another thing of value |
| medium of exchange | anything that everyone accepts as payment for products or services |
| kinds of money | currency, demand deposits, credit |
| demand deposits | money kept in a checking account that people can get back by writing a check or making a withdrawal |
| ow gov't affects money supply | taxing and spending |
| free market | condition in which buying and selling take place |
| interest | amount charged for taking out a loan |
| factors of production | things used to produce goods and services: land, labor, capital and management |
| motivation | extra benefit that gets workers to produce more; a bonus is an example |
| management | people who combine land, labor and capital to produce goods and services; people who make the decisions |
| consumer good | product made for use by people |
| producer good | product used to make consumer goods |
| necessities | things people must have in order to survive |
| luxuries | things that people want but can live without |
| free enterprise | freedom of people to enter into any legal business that they wish to work in |
| mixed economy | a capitalist economy in which the gov't plays a limited role |
| multiplier effect | economic rule that states one extra dollar in the economy will produce five dollars worth of spending |
| real goods | goods produced by businesses using the four factors of production |
| consumer spending | the flow of income in an economy that results when businesses pay workers and workers spend their income creating profit for the business and continuing the cycle |
| normal profits | lowest profit that will keep a business going |
| excess profits | money earned over and above normal profits; usually short-lived due to competition |
| profit motive | the desire of a business to make the most money it can |
| pure competition | a market in which no one can control the supply or demand; large number of buyers and sellers |
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