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Economics Unit One Vocabulary

Terms in this set (50)

microeconomics
the study of the economic behavior and decision making at the individual level
self-interest
One's own personal gain
goods
physical objects such as clothes or shoes
free rider
someone who would not choose to pay for a good or service, but would get it anyway if it were provided as a public good
laissez faire
doctrine that states that the government generally should not intervene in the market
gross domestic product
total value of all final goods and services produced in an economy in a given year (GDP)
land
natural resources that are used to make goods and services
market economy
economic system in which decisions are based on voluntary exchange in the market
efficiency
using resources in such a way as to maximize the production of goods and services
economics
the study of how people seek to satisfy their needs and wants by making choices
macroeconomics
the study of the behavior and decision making of entire economics
labor
the effort that people devote to a task for which they are paid
services
actions or activities one performs for another
shortages
a situation in which a good or service is unavailable (temporary)
public disclosure laws
laws requiring companies to provide full information about their products
standard of living
level of economic prosperity
cost
an alternative sacrifice when we make a decision
opportunity cost
the most desirable alternative given up as the result of a decision
private sector
the part of the economy that involves the transactions of individuals and businesses
need
something like air, food, or shelter that is necessary for survival
mixed economy
economic system that combines the free market with limited government involvement
guns or butter
a phrase that refers to the trade off that nations face when choosing whether to produce more or less military or consumer goods
capital
any human made resource that is used to create other goods
command economy
economics system in which the central government makes all decisions on the production and consumption of goods and services
centrally planned economy
economics system in which the central government makes all decisions on the production and consumption of goods and services
economic system
the method used by a society to produce and distribute goods and services
want
an item that we desire but that is not essential to survival
scarcity
limited quantities of resources to meet unlimited wants
factors of production
the three groups or resources that are used to make all goods and services
trade off
an alternative that is given up as the result of a decision
entrepreneur
ambitious leaders who combine land,labor,and capital to create and market new goods and services
welfare
government aid to the poor
externality
an economic side effect of a good or service that generates benefits or costs to someone or something
public good
a shared good or service for which it would be impractical to make consumers pay individually and to exclude nonpayers
production possibility curve
a curve that shows alternative ways to use economy's resources
profit
the financial gain made in a transaction
communisim
a political system characterized by a centrally planned economy with all economic and political power resting in the hands of the central government
competition
the rivalry among sellers to attract customers while lowering cost
invisible hand
term used to describe the self-regulating nature of the marketplace
poverty threshold
an income level below which income is insufficient to support families or households
market failure
a situation in which the market does not distribute resources efficiently
safety net
government programs that protect people experiencing unfavorable economic conditions
in kind benefits
goods or services provided for free or at greatly reduced prices
underutilization
using fewer resources than an economy is capable of using
cash transfer
direct payments of money to eligible poor people
traditional economy
economic system that relies on habit,custom,or ritual to decide questions of production and consumption of goods and services
socialism
a social or political philosophy based on the belief that democratic means should be used to evenly distribute wealth throughout a society
incentive
an expectation that encourages people to behave in a certain way
open opportunity
concept that everyone can compete in the marketplace
specilization
the concentration of the productive efforts of individuals and firms on a limited number of activities
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