52 terms

Chapter 1 and 2 Economics

STUDY
PLAY

Terms in this set (...)

scarcity
We have limited resources but unlimited wants ex: land, water, time
Physical Capital
objects made by human beings and used to produce goods and services
Human Capital
human knowledge & experience/skill ex: writing, reading, typing
shortage
wanting more of a good than producers are willing to make or can make so there is a short supply ex: gas
Need
something you need to survive ex: food, shelter, water, air, clothes please
Want
something you desire to have but don't need to live ex: a new bathroom, new counter tops, trip to New Zealand,
opportunity cost
the best alternative you miss out on when you make choice (ex: if you work you miss out on friends)
trade off
get something but have to give up something (ex: I'll have pizza but no pasta unless you are at Pizza hut LOLZ)
Guns & Butter
A trade off that country's make about how to use their $. They can spend it on military or resources for their people
Free Enterprise/Free Market
Individuals make all the decisions, people earn profits based on supply and demand. Example: no one really has this completely
command economy
The government makes all the decisions. Example: North Korea, how many shoes are you going to make!
Mixed Economy
Individuals have freedom to start businesses and people can make choices BUT government is involved for safety, regulations, law and defense. Example: US Economy
Demand
To desire something and be able to pay for it.
Substitute
Item that replaces another item: ex: Butter for Margarine
Compliment
Two good that are bought and sold together: ex:toothpaste/tooth brush
Normal good
Name brand item: Ugg, Nike, Adidas that you buy with more income
Inferior good
Off brand of something: Equate, Roundy's, Great Value that you buy with less income
law of supply
The higher the price, the more producers are willing to supply
fixed cost
you always have to pay this amount ex: rent, taxes, insurance
variable cost
you sometimes have to pay this depending on the situation ex: penalty fee, attorney bill, seasonal workers
total cost
final cost of fixed cost + variable cost
entreprenuer
someone who starts their own business ex: Steve Jobs, Mary Kay
revenue
income received by the government from our taxes
fiscal policy
the way the government can influence the economy by using taxes & spending ex: raise taxes to slow the economy or lower taxes to grow the economy *increase spending to grow the economy & decrease spending to slow the economy
budget deficit
We are spending more money than we are making in revenue
National debt
Total amount of deficits plus the interest *U.S. 19 trillion
import
to bring goods into a country
export
to send goods out of a country
interdependence
Our nation's rely on one another to get goods & services
self-interest
an individual's own personal gain
law of demand
consumers buy more of a good when its price decreases and less when its price increases
surplus
A situation in which quantity supplied is greater than quantity demanded
equilibrium price
the price that balances quantity supplied and quantity demanded
discretionary spending
Federal spending that congress and the president get to decide on.
mandatory spending
Required govt spending by permanent laws
medicare
A federal program of health insurance for persons 65 years of age and older
medicaid
Federal program that provides medical benefits for low-income persons.
monetary policy
managing the economy by altering the supply of money and interest rates
purchasing power
the ability to purchase goods and services, hurt by inflation
entitlement programs
Government programs providing benefits to qualified individuals based on need.
barter economy
system in which one set of goods or services is exchanged for another
capital goods
Buildings, machines, technology, and tools needed to produce goods and services.
consumer goods
products and services that satisfy human wants directly
cost-benefit analysis
economic model that compares the marginal costs and marginal benefits of a decision
factors of production
resources-land, labor, capital goods, entrepreneurship
Microeconomics
the study of the economic behavior and decision making of small units, such as individuals, families, and businesses
Macroeconomics
the study of the economy as a whole, including topics such as inflation, unemployment, and economic growth
market economy
economic system in which decisions on production and consumption of goods and services are based on voluntary exchange in markets
mixed leaning command
A type economy where most of the decisions are made by the government with only a few elements of a private sector ex Cuba China North Korea
Mixed leaning market
Countries where they are primarily a market economy but have government involvement in the basic elements of the economy ( schools and roads) ex USA, Japan
natural resources
Raw materials supplied by nature
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.

Flickr Creative Commons Images

Some images used in this set are licensed under the Creative Commons through Flickr.com.
Click to see the original works with their full license.