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101 terms

Economics Final

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Economics
The study of how people seek to satisfy their needs and wants by making choices
Micro Economics
deals with behavior and decision making by small units such as individuals and firms
Macro Economics
Economic issues which address the behavior of the economy as a whole and decision making by large units, in particular the government
Good
An object people want/need that is tangible
Resource
A substance in the environment that is useful to people, is economically and technologically feasible to access and is socially acceptable to use.
Serivce
any activity that fulfills a human want or need and returns money to those who provide it
Tangible
can be touched
Intangible
not able to be perceived by touch; vagu
Want
Something unnecessary
Need
Basic requirement for survival
Scarcity
Not having enough resources to produce all of the things we need to have
Economic System
The way in which a country decides to produce the goods/services it needs
Trade- off
Giving up one thing for another
Opportunity Cost
Cost of the next best alternative use of money, time, or resources when one choice is made rather than another
Fixed Cost
a cost that does not change, no matter how much of a good is produced
Variable Cost
a cost that rises or falls depending on how much is produced
Marginal Cost
Extra cost of producing one additional unit of production.
Total Revenue
the total amount of money a firm receives by selling goods or services
Marginal Revenue
the change in total revenue from an additional unit sold
Marginal Benefit
the extra benefit of adding one unit
Cost-Benefit Analysis
decision-making method that compares marginal costs and marginal benefits
Natural Resources
Materials or substances such as minerals, forests, water, and fertile land that occur in nature and can be used for economic gain
Labor
Human effort directed toward producing goods and services
Capital
Manufactured goods that make up other goods
Entrepreneur
A person who organizes, manages, and takes on the risks of a business.
Comparative Advantage
The ability of a country to produce a good at a lower cost than another country can.
Demand
Consumer willingness and ability to buy products
Supply
The amount of goods available
Law of demand
consumers buy more of a good when its price decreases and less when its price increases
Law of supply
Tendency of suppliers to offer more of a good at a higher price
Demand schedule
a table that shows the relationship between the price of a good and the quantity demanded
Supply schedule
a table that shows the relationship between the price of a good and the quantity supplied
Equilibrium
A situation in which the market price has reached the level at which quantity supplied equals quantity demanded
Equilibrium price
the price at which the amount producers are willing to supply is equal to the amount consumers are willing to buy
Equilibrium quantity
the amount of output that results in no shortage or surplus, the amount of goods and services bought and sold in the economy
Demand elasticity
Measure of responsiveness relating change in quantity demanded to a change in price
Inelastic demand
A situation in which an increase or a decrease in price will not significantly affect demand for the product
Supply elasticity
Responsiveness of quantity supplied to a change in price
Inelastic supply
exists when a change in a good's price has little impact on the quantity supplied
Price effect
The impact that a change in value has on the consumer demand for a product or service in the market.
Substitute good
A good that satisfies most of the same needs as the original good
Complementary good
Goods that are commonly used with other goods
Taste
What is trendy or in style
Expectation
an outcome or event that a person anticipates or looks forward to
Surplus
A situation in which quantity supplied is greater than quantity demanded
Shortage
A situation in which quantity demanded is greater than quantity supplied
Command economy
An economic system in which the government makes all economic decisions.
Mixed economy
An economy in which private companies exists in combination with a considerable amount of government regulation and promotion.
Market economy
A market economy is an economy in which decisions regarding investment, production, and distribution are based on supply and demand, and prices of goods and services are determined in a free price system.
Three goals of an economic system
Stable prices, low unemployment, economic growth
Gross domestic Product
The dollar amount of all final goods and services produced within a country's borders in a year.
Laissez-faire
Hands off. No government intervention in business.
Developed Countries
countries with strong economies and a high quality of life
Developing Countries
countries with less productive economies and a lower quality of life
Traditional Economy
An economy in which production is based on customs and traditions and economic roles are typically passed down from one generation to the next.
Cold War
A conflict that was between the US and the Soviet Union. The nations never directly confronted each other on the battlefield but deadly threats went on for years
Capitalism
An economic system based on private ownership of capital
Communism
A political system in which the government owns all property and dominates all aspects of life in a country.
Trade
Exchange of goods and services
Subsidy
A government payment that supports a business or market
Imports
goods and services brought into a nation from another nation
Exports
goods sent to markets outside a country
Trade Surplus
when a country exports more than it imports
Trade Deficit
when a nation imports more goods and services than it exports
Trade Barriers
Taxes, quotas, and other restrictions on goods entering or leaving a country.
Tariff
A tax on imported goods
Quota
A limit placed on the quantities of a product that can be imported
Exchange Rate
The measure of how much one currency is worth in relation to another.
Economic Freedom
The freedom to own property, to make a profit, and to make choices about what to produce, buy, and sell
Economic Efficiency
Occurs when society is producing the goods and services most valued by society. Resources are not wasted and put to the best use possible.
Economic growth
a steady, long-term increase in real GDP
Economic equity
the fairness with which an economy distributes its resources and wealth
Economic security
The idea that the less fortunate members of society should get the economic support they need to live a decent life
FDA
Food and Drug Administration. The agency that is responsible for determining if a food or drug is safe and effective enough to be sold to the public.
EPA
An independent federal agency established to coordinate programs aimed at reducing pollution and protecting the environment
FTC
Federal Trade Commission. Protects consumers from misleading and fraudulent advertising, promote free and fair competition by prevention of trade restraints, price fixing, false advertising and unfair methods of competition
Monopoly
A company that controls all production and sales of a particular product or service
Trust
A group of corporations that unite in order to reduce competition and control prices in a business or an industry by buying up stocks
Business cycle
Alternating periods of economic expansion and economic recession
Peak
the height of economic expansion, when real GDP stops rising
Trough
Lowest point of Real GDP in a business cycle
Expansion
A period of economic growth as measured by a rise in real GDP
Contraction
A period of economic decline marked by falling real GDP
Recession
A slowdown in economic activity over a period of two quarters. During one of these periods all of the following things decline: Gross Domestic Product (GDP), employment, investment spending, capacity utilization, household incomes, business profits and inflation. Meanwhile bankruptcies and the unemployment rate rise.
Real GDP
GDP adjusted for price changes
Stock Market
A general term used to describe all transactions involving the buying and selling of stock shares issued by a company.
Stock
A share of ownership in a corporation.
Capital Gains
profits made from the sale of stocks if they increase in value over time
Dividends
Company's share profits to the shareholders based on the corporation's performance.
Tax revenue
The money a government gains from the collection of taxes
Excise tax
a tax on specific goods and services such as alcohol, cigarettes, gasoline, and airlines
Individual income tax
a tax based on a person's earnings
Corporate Income tax
The tax a corporation pays on its profits
Welfare
The health, prosperity, and happiness of the members of a community
SNAP
Supplemental Nutrition Assistance Program: offers nutrition assistance to low-income families and benefits communities
TANF
Temporary Assistance for Needy Families: Financial assistance to the poor
Social Secuirty
Unemployment insurance, money for retired workers, provided payments to blind, elderly, widows
Poverty
Inability to meet basic needs for food, clothing, and shelter.
Progressive Income Tax
The percentage of income paid in taxes will increase as income increases.
Three Influences on Income
Education, family wealth, and discrimination
Stock Portfolio
A collection of stocks from different individual corporations