73 terms

A.P. Macro Unit 1 Test

the study of how people seek to satisfy their needs and wants by making choices
the branch of economics that studies the economy of consumers or households or individual firms
the branch of economics that studies the overall working of a national economy
limited quantities of resources to meet unlimited wants
pleasure, happiness, or satisfaction
marginal analysis
analysis that involves comparing marginal benefits and marginal costs
economic goals
economic growth, full employment, economic efficiency, price level stability, economic fredom, an equitable distribution of income, economic security, balance of trade
mutually exclusive goals demand that, to achieve one, we must sacrifice another
a collection of specific economic units treated as if they were one unit
factors of production
land, labor, and capital
full employment
the economic condition when everyone who wishes to work at the going wage-rate for their type of labor is employed
opportunity cost
The highest valued alternative foregone in the pursuit of an activity
economic growth
steady growth in the productive capacity of the economy (and so a growth of national income)
traditional economy
economic system that relies on habit, custom, or ritual to decide questions of production and consumption of goods and services
command economy
An economic system in which the government controls a country's economy.
market economy
an economy that relies chiefly on market forces to allocate goods and resources and to determine prices
resource market
A market in which a resource is bought and sold
product market
the market in which households purchase the goods and services that firms produce
the world of commercial activity where goods and services are bought and sold
the ability and desire to purchase goods and services
law of demand
consumers buy more of a good when its price decreases and less when its price increases
deminishing marginal utility
the principal establishing that price alone does not determine demand.
income effect
the change in consumption resulting from a change in real income
substitution effect
when consumers react to an increase in a good's price by consuming less of that good and more of other goods
demand schedule
a table that shows the relationship between the price of a good and the quantity demanded
demand curve
a graphic representation of a demand schedule
change in the quantity demanded
a movement along the demand curve that occurs in response to a change in price
determinants of demand
consumer tastes, the number of buyers in the market, the money incomes of consumers, the prices of related goods, and price expectations
two goods for which an increase in the price of one leads to an increase in the demand for the other
Two goods that are bought and used together
unrelated goods
Goods that don't effect each other
offering goods and services for sale
law of supply
Tendency of suppliers to offer more of a good at a higher price
supply schedule
a table that shows the relationship between the price of a good and the quantity supplied
supply curve
a graph of the relationship between the price of a good and the quantity supplied
change in the quantity supplied
a movement along the supply curve that occurs in response to a change in price
change in supply
resource prices, production techniques, taxes or subsidies, the prices of other goods, price expectations, or the number of sellers in the market
the property of being an amount by which something is less than expected or required
a quantity much larger than is needed
a state of equality
equilibrium price
the price that balances quantity supplied and quantity demanded
equilibrium quantity
the quantity supplied and the quantity demanded at the equilibrium price
price ceiling
a maximum price that can be legally charged for a good or service
price floor
floor below which prices are not allowed to fall
private property
property owned by individuals or companies, not by the government or the people as a whole
economic freedom
The freedom to own property, to make a profit, and to make choices about what to produce, buy, and sell
concern for ones own well being and advantages
the act of competing as for profit or a prize
the practical application of science to commerce or industry
role of government
laws set in regulating economic activities and improving economic conditions
declining industries
Growth becomes negative for a variety of reasons, including technological substitution. Within a declining industry, the degree of rivalry among established companies usually increases. The greater the exit barriers, the harder it is for companies to reduce capacity and the greater is the threat of severe price competition. (falling demand = excess capacity, growth becomes negative)
consumer soverignty
role of consumer as ruler of market when deternmining the types of goods and services produced
invisible hand
term economists use to describe the self-regulating nature of the marketplace
services and products provided for consumers
Activities that are consumed at the same time they are produced
tangible products that we use to satisfy our wants and needs
a fund of money put by as a reserve
durable goods
a consumer good with an expected life (use) of 3 or more years
nondurable goods
goods such as clothing and food.
buildings for carrying on industrial labor
members of a business organization that owns or operates one or more establishments
the organized action of making of goods and services for sale
sole partnership
a business enterprise owned by one individual
an organization that is authorizrd by law to carry on an activity but treated as though it were a single person
shares of ownership in a company
certificates that represent money the government has borrowed from private citizens
limited liability
the liability of a firm's owners for no more than the capital they have invested in the firm
a market in which there are many buyers but only one seller
charge against a citizen's person or property or activity for the support of government
transfer payments
payments by the government to individuals for which the government does not receive a new good or service in return
any indirect effect of public expenditure
government revenue
income available to the government
a contract between two or more persons who agree to pool talent and money and share profits or losses