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Econ Exam-09

Econ Exam-09 Christmas, Janousky

Ability-to-pay a principle stating that government should tax people in proportion to their ability to pay the tax
Average fixed costs total fixed costs divided by quantity produced
average total costs the sum of average fixed and variable costs
average variable costs total variable costs divided by quantity produced
barter an exchange of goods and services without using money
benefits the gains that result when a choice is made
benefits-received principle a principle stating that government should tax people in proportion to the benefits they receive from a government good or service
buying power the quantity of goods and services a person can buy with a given amount of money
capital the buildings, tools, and machines people create and use to produce final goods and services
charter a document that states the nature of the business, the initial owners of the stock, and the types of stocks to be sold
command economy an economic system in which the government holds most property rights
complementary goods products that often are used together
consumption the process of using a product or service
corporation a business organization managed on behalf of its owners who provide the funds
costs the losses that result when a choice is made
demand quantities of a particular good or service consumers are willing and able to buy at different prices at a particular time
diminishing marginal utility the point reached when an additional unit of a product consumed is less satisfying than the one before it
disincentive a negative or withdrawn reward
distribution the process of getting a product or service to consumers
economic equity a condition of economic fairness and impartiality
economic freedom a condition in which individuals and businesses have freedom of choice in employment, buying, selling, use of time, and other economically related decisions
economic growth a condition in which the output of goods and service in an economy increases over the period of a year
economic security a condition in which the basic needs of every person should be met
economics a social science that studies how people, acting individually and in groups, decide to use scarce resources to satisfy their wants
economies of scale reductions in cost resulting from large-scale production
efficiency a condition in which maximum output is obtained from the resources used to produce goods and services
enterprise a term for a business organization
entrepreneurship the imagination, innovative thinking, and management skills needed to start and operate a business
externality an economic side effect of producing or consuming a good or service that generates benefits to someone other than the person who decides how much to produce or consume
factors of production the land, labor, and capital resources used to produce goods and services
FICA an acronym that stands for Federal Insurance Contributions Act, which directs the taxes people pay for Social Security and Medicare
Fiscal Policy the use of government spending and taxation to stabilize the economy
Fiscal year a 12-month period that can begin on any day. The US federal government fiscal year starts October 1 and ends September 30 of the following year
fixed costs costs that remain the same regardless of the amount of product a firm produces
franchises a license that entitles its holder to operate his or her individually owned business as if it were part of a large chain of stores
free enterprise the condition that allows people to freely make choices in their economic roles
full employment a condition in which almost all people in the labor force are able to find work
GDP deflator a price index that reduces the current gross domestic product prices into prices of a base year
Gross Domestic Product(GDP) the final value of all goods and services produced within a country in a year
incentive a positive reward that results from making a choice or behaving in a certain way
industry a group of one or more firms that produce identical or similar products
labor the physical and mental efforts people use to create goods and services
labor productivity the amount of goods and services the work force can produce during a given time period—an hour, a week, a month, or a year
land natural resources that are unaltered gifts of nature, such as soil, minerals, timber, and fresh water
law of demand an inverse relationship between the quantity demanded and the price of a product
law of diminishing marginal returns an economic principle which holds that as more and more variable resources are added to a fixed amount of other resources, the additional amount produced eventually decreases
law of supply a positive relationship between the quantity supplies and the price of the product
macroeconomics the study of the economy as a whole
marginal the extra or additional costs or benefits of a decision
marginal analysis decision making that involves comparing marginal benefits and marginal costs
marginal costs the additional cost of increasing one unit of production
marginal revenue the additional revenue generated from the sale of an additional quantity of the product
market an arrangement that allows buyers and sellers to make exchanges
market competition rivalry among businesses for resources and customers
market demand the total of all individual demands in a given market at a particular time
market economy an economy that relies on voluntary trade as the primary means of organizing and coordinating production
market supply the total of all individual suppliers’ products in a market at a particular time
market-clearing price the price at which the amount supplies is equal to the amount demanded
microeconomics the study of individual consumers and businesses
mixed economy an economic system that blends voluntary exchange, government command, and traditional elements of economic choice-making
monetary policy regulating the money supply to help the economy achiever a full-employment, noninflationary level of total output
money anything that is generally accepted as payment for goods and services
national debt the cumulative sum of all federal government borrowing used to finance annual deficits
Nominal GDP gross domestic product reported in current prices
Opportunity cost the highest valued alternative given up as a result of making a choice
partnership a business organization owned by two or more people who share ownership and control over the business
predatory pricing selling a product below its cost with the goal to drive competitors out of business
price effect the inclination of people to buy less of something at higher prices than they would buy at lower prices
price elasticity of demand a measure of the impact of the price effect
price stability an economic condition in which prices of goods, services, and resources do not fluctuate significantly, either up or down, in a short period of time
price system an arrangement that uses monetary prices as messages to facilitate exchanges between buyers and sellers
private property resources and products owned by individuals or businesses
production a process that combines economic resources so the result is a good or service that is available for sale
productivity the output of goods and services measured per unit of input by labor, capital, or land
profit a positive difference between total sales and total costs
progressive tax a tax that takes a higher proportion of income from higher income earners than from lower income earners
proportional tax a tax for which the percentage of income paid in taxes is the same for all income levels
public good something that, once provided, is available to anyone without additional cost
public property resources and products owned by government
public sector the part of the economy that involves the transactions of government
rationing distributing or allocating a product by a price system
real GDP Gross domestic product adjusted for inflation
real per capita GDP real gross product divided by a country’s population
regressive tax a tax for which the percentage of income paid in taxes decreases as income increases
scarcity an inequality that exists between wants and resources available to satisfy them
shortage the difference between the amount supplied and the amount demanded when the asking prices is less than a market-clearing price
sole proprietorship a business owned by one person
specialization a process in which businesses and people focus on producing one or a few parts of entire product
stock exchange a market in which the public buys and sells shares of stock
substitute a good or service that can replace another good or service
supply quantities of a good or service that producers are willing and able to sell at different prices at a particular time
surplus the difference between the amount supplied and the amount demanded when the asking price is greater than the market clearing price
total costs the sum of total fixed costs and total variable costs
total revenue a calculation of revenue that is determined by price times the quantity of units sold
trade exchanging something for something else
traditional economy an economic system in which people rely on traditions or customs to make what, how, and for whom choices
variable costs costs that change with the changing amounts of production
Created by: rangerlove13