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Semester exam- Econ
2nd Semester exam study guide for economics
| Question | Answer |
|---|---|
| Capital | A resource made by humans and used to create other goods and services. |
| Efficiency | Serve each individual or entity. |
| Goods | Satisfy human wants. |
| Trade-off | The alternative we sacrifice when we make a decision. |
| Production possibilities graph | Examine the opportunity cost of a decision can decided using. |
| Scarcity | Scarcity- Limited quantities of resources to meet unlimited wants. |
| Services | Labor that requires specialized skills and education. |
| Shortage | Temporary lack of one or more goods. |
| Opportunity cost | The most desirable alternative given up as the result of a decision. |
| Under-utilization | The use of fewer resources than the economy is capable of using. |
| Labor | The effort people devote to tasks for which they are paid. |
| Factors of production | Land, labor, and capital, the 3 groups of resources that are used to make all goods and services. |
| Elasticity of demand | A measure of how consumers react to a change in price. |
| Substitution effect | When consumers react to an increase in a good’s price by consuming less of that good and more of a substitute good. |
| Law of demand | As the price of a product increases, quantity demanded falls. As the price of a product decreases, quantity demanded increases. |
| Complement | Cars and gasoline. A change in demand for one has a direct effect on the other. |
| Substitute | A good that can be consumed in place of another good. |
| Total revenue | The amount a firm receives for the sale of of its output. |
| Normal good | A good that consumers demand more of when their incomes increase. |
| Inferior good | A good that consumers demand less of when their income increases. |
| Demand curve | A graph of the relationship between the quantity demanded of a good and its price when all other influences on buying plans remain the same. |
| Ceteris paribus | Other things remaining the same. |
| Economics of scale | Factors that cause a producer’s average cost per unit to fall as output rises. |
| Trust | The arrangement under which the owners of several companies transfer their decision-making powers to a small group of trustees. |
| Franchise | The right to sell a good or service within an exclusive market. |
| Oligopoly | A business made up of semi independent businesses that all offer the same product or service. |
| Barrier to entry | Any factor that makes it difficult for a new firm to enter a market. |
| Price war | A series of competitive price cuts that lowers the market price below the cost of production. |
| Antitrust laws | Encourages competition in the marketplace. |
| Market power | The ability of a company to change prices and output like a monopoly. |
| Differentiation | Making a product different from other similar products. |
| Perfect competition | All human-made goods that are used to produce other goods and services, tools and buildings. |
| Bear market | A steady drop or stagnation in the stock market over a period of time. |
| Bull market | A steady rise in the stock market over a period of time. |
| Equities | Represents investments by stockholders in the company. |
| Investment | The use of of assets to earn income or profit. |
| Money market | Network of corporations, financial institutions, investors and government that deal with the flow of short-term capital. |
| Portfolio | A collection of financial assets. |
| Primary market | A market for selling financial assets that can be redeemed only by the original holder. |
| Prospectus | An investment report that provides information to potential investors. |
| Return | The money an investor receives above and beyond the sum of the money initially invested. |
| Speculation | The practice of making high-risk investments with borrowed money in hopes of getting big return. |
| Free market economy | Needs some government convention to decide over a market place. |
| Socialism | Government controls one aspect of the economy. |
| Karl Marx | Communist Manifesto. |
| Adam Smith | A free market philosopher. |
| Vladimir Engels | Communist leader for the former soviet union. |
| Market system | An economic system in which property resources are privately owned and markets and prices are used to direct and coordinate economic activities. |
| Inelastic supply of good | The quantity demanded or supplied of a good or service is unaffected when the price of that good or service changes. |
| Price ceilings | A maximum price that can legally charge for a good or a service. |
| Minimum wage | Lowest wage that can be paid to most workers. |
| Natural monopoly | A market that runs most efficiently when a large firm supplies all of the output. |
| Non-price competition | A way to attract customers through style, service, or location, but not a lower price. |
| Credit union | A non-profit financial cooperative owned by its member. |
| Mortgage | A specific type of loan that is used to buy real estate. |
| Diversification (in the financial market) | The strategy of spreading out investments to reduce risk. |
| Bonds | Person who buys a bond is lending money to the government or corporation that sells the bond. |
| Savings bonds | A low-denomination bond issued by the United States Government. |
| Dow Jones Industrial Average | An index that shows how the stocks have traded. |
| GDP (Gross Domestic Product) | The market value of all the final goods and services produced within a country at a given time period. |
| Great Depression | The severe economic decline that began in 1929 and lasted for a decade. |
| Non-durable good | Goods that last a short period of time, such as food, light bulbs, and sneakers. |
| Know an example of a shortage | Limited amounts of food, because the truck are carrying it are on strike. |
| Characteristics of a centrally planned economy | Government owns all factors of production, no consumer sovereignty, and government planners decide what goods and services will be produced. |
| Advantages of a free market | Encourages growth. |
| Government roles in a free enterprise system | Allowing individuals to operate their business to in ways they think will maximize their profits. |
| Effect of technology on the economy | Stronger and more efficient. |
| Example of a public good | Roads and parks. |
| Future price in relation to current demand | Price is expected to rise, the command will rise. |
| Principle of law and demand | The quantity demanded of a good falls when the price of the good rises. |
| Example of the law of supply | Company increases the amount of product they supply, and the price increases. |
| Example of a good with an inelastic supply | Fruit or food. |
| What factor has the greatest influence of elasticity and in-elasticity of supply? | Time |
| What is a fixed cost for a store? | Light bill, water bill, power bill, rent, wages. |
| What are conditions for perfect competition? | Wide variety of products in a condition. |
| Functions of a natural monopoly | Single firms supply all the output. |
| Advantages of sole propiertorships | It's the least regulated. |
| Examples of a barter system | Pay for their money back by doing work around the house. |
| What is the purpose of the FDIC? | The government agency that insures customer deposits if a bank fails. |
| Examples of a durable good | A used car. |
| Know what happens to the quantity supplied when the selling price of a good goes up | The price goes down. |
| Know an example of a good whose price went down because of improvements in technology | Gasoline |
| What would cause the market to behave inefficiently? | Competition |
| Why were command economic systems used for many years by Communist governments? | Create a society in which everyone is equal. |
| Know what type of natural monopoly the U.S. government permits? | Many companies selling similar but no identical products. |
| Know the benefits of a partnership versus a sole proprietorship | A business owned and controlled by one person. |
| What percentage of businesses are sole proprietorship? | 75% |
| Why is investing in a money market mutual fund a higher risk than investing in a CD (certificate of deposit)? | Invested in a variety of stocks and bonds. |
Created by:
Katwill678
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