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4th 6 Weeks Eco Vocab

Terms in this set (50)

Factors of production
land, labor, and capital; the three groups of resources that are used to make all goods and services
Land
natural resources that are used to make goods and service for which it has a comparative advantage
Entrepreneur
ambitious leader who combines land, labor, and capital to create and market new goods or services
Shortage
a situation in which a good or service is unavailable, or a situation in which the quantity demanded is greater than the quantity supplied, also known as excess demand
Scarcity
limited quantities of resources to meet unlimited wants
Trade-off
an alternative we sacrifice when we make a decision (choice)
Opportunity Cost
the most desirable alternative given up as the result of a decision (what you give up)
Production Possibility Curve
a curve that shows alternative ways to use economy's resources
Efficiency
using resources in such a ways as to maximize the production of goods and services
Underutilization
using fewer resources than an economy is capable of teaching
Standard of Living
level of economic prosperity
Market Economy
economic system in which decisions on production and consumption of goods and services are based on voluntary exchange in the markets
Command Economy
economic system in which the central government makes all decisions on the production of goods and services
Mixed Economy
economic system that combines free market with limited government involvement
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 and political belief that democratic means should be used to evenly distribute wealth throughout society
Communism
a political system characterized by a centrally planned economy with all economic and political power resting in the hands of the central government
Laissez faire
the doctrine that states that government generally should not intervene in the marketplace
Free Enterprise
an economic system characterized by private or corporate ownership of capital goods; investments that are determined by private decision rather than by state control; and determined in a free market
Household
a person or group of people living in the same
Firm
an organization that uses resources to produce a product, which it then sells
Factor market
market in which firms purchase the factors of production from households
Demand
the desire to own something and the ability to pay for it
Law of Demand
consumers buy more of a good when its price decreases and less when its price increases
Substitution effect
when consumers react to an increase in a good's price by consuming less of that good and more of other goods
Income effect
the change in consumption resulting from a change in real income
Complement
two goods that are bought and used together
Substitute
goods used in place of each other
Inelastic
describes demand that is not very sensitive to a change in price
Elastic
describes demand that is very sensitive to a change in price
Diminishing Marginal Utility
the decreasing satisfaction (happiness) by consuming each additional unit
Supply
the amount of goods available
Law of Supply
tendency of suppliers to offer more of a good at a higher price
Equilibrium
the point at which quantity demanded = quantity supplied
Price ceiling
a maximum price that can be legally charged for a good or service
Price floor
a minimum price for a good or service
Surplus
a situation in which quantity supplied is greater than quantity demanded
Economics
the study of how people seek to satisfy their needs and wants by making choices
Product Market
that market in which households purchase the goods and services that firms produce
Liability
the legally bound obligation to pay debts
Stock
the certificate of ownership in a corporation
Dividend
the portion of corporate profits paid out to stockholders
Business Franchise
a semi-independent business that pays fees to a parent company in turn for the exclusive right to sell a certain product or service in a given area
Cooperative
a business organization owned and operated by a group of individuals for their mutual benefit
Differentiation
making a product different from other similar products
Collusion
an agreement among firms to divide the market, set prices, or limit production
Commodity
a product that is the same no matter who produces it, such as petroleum, notebook paper, or milk
Nonprice Competition
a way to attract customers through style, service or location, but not a lower price
Antitrust Law
law that encourage competition in the marketplace
Deregulation
the removal of some government controls over a market
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