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5.0 Economics

Terms in this set (82)

Budget deficit
when the government spends more on programs than it collects in taxes
Budget surplus
when the government collects more in taxes than it spends in taxes
Business
an activity that seeks profit by providing goods or services to other
Business cycle
rise and fall of economic activity over time; includes prosperity, recession, depression, recovery
Buyer's market
time for consumers to buy; characterized by large supply, small demand, and low prices
Capitalism
aka free enterprise, private enterprise, market economy
Capital Goods or Resources
Manufactured or constructed items that are used in the production of goods and services to produce goods and services, like building, materials, and equipment
Command Economy
an economy in which government makes all decision concerning the three important economic questions, planned or managed economy, aka Communism
Competition
rivalry among businesses to sell their goods and services
Consumer
a person who selects, purchases, uses or disposes of goods or services
Consumer Complaints
right of the consumer when a product or service does not meet expectations
Consumer goods
Tangible items produced for personal use, goods sold to families and individuals, includes convenience goods, shopping goods and services, and specialty goods and services
Consumer price index
An index of prices used to measure the change in the cost of basic goods and services in comparison with a fixed base period; aka cost-of-living index
Consumption
The process or activity of using goods and services
Deflation
a general decrease in the cost of goods and services
Demand
The quantity of a good or service that buyers are ready to buy at a given price at a particular time
Depression
deep recession that affects the entire economy and lasts for several years
Distribution
A marketing/business function that is responsible for moving, storing, locating, and/or transferring ownership of goods and services
Economic Indicators
GDP, Inflation, Unemployment
Economic Questions
what to produce, how to produce and for whom to produce
Economics
how a society chooses to use resources to produce/distribute goods and services for people
Elastic demand
form of demand for products in which changes in price correspond to changes in demand
Elasticity
indication of how changes in price will affect changes in the amounts demanded and supplied
Entrepreneur
one who recognizes the need for new goods and services and organizes, manages and assumes the risk of business enterprise
Entrepreneurial Resources
the initiative to recognize opportunities and start businesses by combining ideas with natural, human and capital resources to produce goods and services
Equilibrium
price at which amount supplied and the amount demanded meet, aka market price
Economic resources
human, natural resources and capital goods used to produce goods and services
Goals
things which you plan to accomplish within a certain time period
Excess demand
The situation that exists when demand is greater than supply
Excess supply
The situation that exists when supply is greater then demand
Factors of production
Productive resources; human and natural resources and capital goods used to produce goods and services
Form utility
Usefulness created by altering form/shape of good to make it more useful to consumer
Goods
items that can be physically weighted and measured
Gross Domestic Product (GDP)
dollar value of all the final goods and services produced in the nation in a single year, one economic indicator determining how well our economy is performing
Human Resources
knowledge, efforts, and skills people bring to their work, aka labor
Industrial goods
Tangible items that will be consumed by industrial users
Inflation
a general increase in the cost of goods and services
Intangible
things that you cannot see or touch
Interdependence
the reliance of business, individuals, and government on each other
Law of demand
consumers will willingly buy fewer goods when prices increase than if the price is lower
Law of supply
producers will provide more of a product/service when the price is high than when price is low
Market price
Actual price that prevails in a market at any particular moment
Market economy
economy where decisions are based on actions of buyers and sellers in the marketplace and the law of supply and demand, variety of goods and services is available due to the consumer's right to choose; aka Capitalism, private enterprise, free enterprise
Marketplace
anywhere that goods or services exchange hands, aka market
Mixed economy
a combination of a market and command economy; system in which government owns major industries (railroads, steel, iron) but allows for private ownership of other businesses; aka Socialism
National debt
total amount of money a government owes
Natural Resources
raw materials found in nature, used to produce goods
Needs
the necessary wants, can be public or private
Non-economic want
Desires for things that can be obtained without spending money
Non-renewable resources
resources that cannot be replaced
Opportunity Cost
what you give up (forgo) when you make one choice over another; tradeoff
Place utility
Usefulness created by making sure that goods or services are available at the place where they are needed or wanted by consumers
Possession utility
Usefulness created when ownership of a product is transferred from the seller to the user
Private Wants
wants that vary from person to person; paid for by individuals
Producers
individuals and organizations that determine which goods and services will be available for consumption
Production
The economic process or activity of producing goods and services
Productivity
production output in relation to a unit of input such as a worker, an hour, a day; how much a person or a country produces; GDP measures a country's productivity
Profit
the amount of money left over after a business has paid for the cost of producing its goods and services; antonym= loss/deficit
Prosperity
a peak of economic activity
Public Wants
wants widely shared by many people, most are satisfied by government ; paid for by taxes
Rationing
A function that determines who gets the scarce resources, goods, services produced
Recession
economic activity slows down
Recovery
a rise in business activity after a recession or depression
Relative prices
One price compared to another; the ratio between two prices
Renewable Resources
Resources that can be replaced
Resources
anything people can use to make or obtain what they need or want
Scarcity
a shortage of resources to satisfy wants and needs
Seller's market
best time for producers to sell; characterized by large demand, small supply, and high prices
Services
tasks (intangible activities) that people/machines perform for others, productive act that satisfies economic wants or needs
Socialism
aka mixed economy
Standard of Living
the measure of how well the people in an economic system live
Substitution effect
A phenomenon that occurs when changes in relative prices cause buyers to replace the purchase of one product with another
Supply
the amount or quantity of goods and services that producers will provide at various prices
Tangible
things that you can see or touch
Time utility
Usefulness created when products are made available at the time they are needed or wanted by consumers or to complete specific business activities.
Tradeoff
process of giving up something for gaining something else
Traditionalism
an economy in which people do things the way they have always been done
Unemployment
when people who want jobs cannot find jobs
Utility
Usefulness; capable of satisfying wants and needs.
Values
important beliefs and ideas that guide a person's decisions in life
Economic wants
Desires for items that can only be obtained by spending money, can be public or private
Production
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