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ECON
Stack #204608
| Question | Answer |
|---|---|
| Freedom of Enterprise | Ensures that entrepreneurs and private businesses are free to obtain and use economic resources to produce their chose of product and to sell them in their chosen markets. |
| Freedom of Choice | Enables to employ or dispose of their property as they see fit. |
| Competition | Is freedom of choice exersized in pursuit of a monetary return. |
| specialization | is the use of resources of an individual, firm, region, or nation to produce one or a few goods or services rather than a range of goods and services |
| human specialization or the division of labor | makes differences in abiliy fosters learning by doing saves time |
| Five Fundamental question | What goods & services will be produced How will the goods and services be produced who will get the goods and services how will the system accomidate change? how will the system progress |
| Self interest | simply means that each economic unit that tries to achieve its own particular goal, which usually requires to deliver something of value to others |
| The functional distribution of income | indicates how the nations earned income is apportioned among wages, rents, interest, and profits, that is according to the function performed by the reciever. |
| Personal distribution of income | indicates how the nation's money is divided among households. |
| 2005 disposition of household income | 88% personal consumptions, 12% personal taxes, >0% savings. |
| durable goods | are things purchased that have a life of 3 rs or more. |
| nondurable goods | are things purchased that have a life of less than 3 yrs. |
| law of demand | All else equal, as price falls, the quantity demand rises, and as price rises, the quantity demanded falls. (inverse) |
| determinants of demand | 1. consumer tastes (preferences) 2. the number of buyers in the market 3. consumers' incomes 4. prices of related goods 5. consumer expectations (right, increase of demand: left, decrease of demand; demand shifters) |
| supply | a schedule or curve showing the various amounts of a product that producers are wiling and able to make abailable for sale at each of a series of possible prices during a specific period. |
| law of supply | a supply schedule tells us that firms will produce and offer for sale more of their product at a high price than a low price |
| demand | a schedule or a curve that shows the various amounts of a product that the consumers are willing and able to purchase at each of a sereis of possible prices during a specified period of time |
| determinants of supply | 1. resources prices 2. technology 3. taxes and subsidies 4. prices of other goods 5. producer expectations 6. the number of sellers in the market (left, decrease of supply: right, increase of supply; supply shifters) |
| surplus / shortage | excess supply (above equilibrium), excess demand (below equilibrium) |
| business population | plant, firm, industry (physical establishment, fabricating and distributing g&s) (business organization that owns and operates plants) (group of firms that produce the same, or similar, products) |
| legal forms of business | sole proprietorship (a business owned and operated by one person), partnership (a business organization that two or more individuals who agree to own and operate a business together), corporation |
| stock | a share in ownership of the corporation |
| bond | lending money to a corporation |
| redistributing income | transfer payments (welfare, medicare) market intervention (price ceiling, price floors) taxation (income tax) |
| negative & positive externalities | spillover to a third party without compenation, spillover to third parties or the community at large legislation, taxes; subsidize consumers, subsidize suppliers, provide goods via govt |
| Economic Resources | Land Labor Capital Entrepreneurial Ability |
| Assumptions of the production possibility curve | Full Employment Fixed Resources Fixed Technology Two Goods |
| law of increasing oppertuinity cost | as the production of a particular good increases, the oppertunity cost of producing and additional unit rises |
| market system | capitalism, private ownership of resources and the use of markets and prices to coordinate direct economic activity. |
| oppertunity cost | what a person gives up to have/own something else |
| economic rationale | for the law of increasing opportunity cost is that all economic resources are not completely adaptable to alternative uses. |
| ownprice | price of product one deals with |
| price change | movement along the demand curve |
| optimal output | MB=MC Marginal Benefits = Marginal Cost |
Created by:
wheezylou