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Economics
Chaper 1-3 vocab
| Question | Answer |
|---|---|
| Need | something essential for survival |
| Want | something desire but that is not necessary for survival |
| Goods | the physical objects that someone produces |
| Services | the actions or activities that one person performs for another |
| Scarcity | the principle that limited amounts of goods and services are available to meet unlimited wants |
| Economics | the study of how people seek to satisfy their needs and wants by making choices |
| Shortage | a situation in which consumers want more of a good or service than producers are willing to make available at a particular price |
| Entrepreneur | a person who decides how to combine resources to create goods and services |
| Factors of production | the resources that are used to make goods and services |
| Land | all natural resources used to produce goods and services |
| Labor | the effort people devote to tasks for which they are paid |
| Capital | any human-made resource that is used to produce other goods and services |
| Physical capital | human-made objects used to create other goods and services |
| Human capital | the knowledge and skills a worker gains through education and experience |
| Trade-off | the act of giving up one benefit in order to gain another, gather benefit |
| "Guns or butter" | a phrase expressing the idea that a country that describes to produce more military goods ("guns") has fewer resources to produce consumer goods ("butter") and vice versa |
| Opportunity cost | the most desirable alternative given up as the result of a decision |
| Thinking at the margin | the process of deciding whether to do or use one additional unit of some resource |
| Cost/benefit analysis | a decision-making process in which you compare what you will sacrifice and gain by a specific action |
| Marginal cost | the extra cost of adding one unit |
| Marginal benefit | the extra benefit of adding one unit |
| Production possibilities curve | a graph that shows alternative ways to use an economy's productive resources |
| Production possibilities frontier | a line on a production possibilities curve that shows the maximum possible output an economy can produce |
| Efficiency | the use of resources in such a way to maximize the output of goods and services |
| Underutilization | the use of fewer resources than the economy is capable of using |
| Law of increasing costs | an economic principle states that as production shifts from making one item to another, more and more resources are needed to increase production of the second item |
| Economic system | the structure of methods and principles that a society uses to produce and distribute goods and services |
| Factor payment | the income of people receive in return for supplying factors of production |
| Profit | the amount of money a business receives in excess of the expenses |
| Safety net | a set of government programs that protect people who face unfavorable economic conditions |
| Standard of living | level of economic prosperity |
| Innovation | the process of bringing new methods, products, or ideas into use |
| Traditional economy | an economic system that relies on habit, custom, or ritual to decide the three key economic questions |
| Market | any arrangement that allows buyers and sellers to exchange things |
| Specialization | the concentration of the productive efforts of individuals and businesses of a limited number of activities |
| Free market economy | an economic system in which decisions on the three key economic questions are based on voluntary exchange in markets |
| Household | a person or group of people living in a single residence |
| Firm | an organization that uses resources to produce a product or service, which it then sells |
| Factor market | the arena of exchange in which firms purchase the factors of production from households |
| Product market | the arena of exchange in which households purchase goods and services from firms |
| Self-interest | an individual's own personal gain |
| Incentive | the hope of reward or fear of penalty that encourages a person to behave in a certain way |
| Competition | the struggle among producers for the dollars of consumers |
| Invisible hand | a term coined by Adam Smith to decide the self-regulating nature of the marketplace |
| Consumer sovereignty | the power of consumers to decide what gets produced |
| Centrally planned economy | an economic system in which the government makes all decisions on the three key economic questions |
| Command economy | another name for a centrally planned economy |
| Socialism | a range of economic and political systems based on the belief that wealth should be evenly throughout society |
| Communism | a political system in which the government owns and controls all resources and means of production and makes all economic decisions |
| Authoritarian | describes a form of government that limits individual freedoms and require strict obedience from their citizens |
| Laissez faire | the doctrine that government generally should not intervene in the marketplace |
| Private property | property that is owned by individuals or companies and not by the government or the people as a whole |
| Mixed economy | a market-based economic system in which the government is involved to some extent |
| Economic transition | a period of change in which a nation moves from one economic's system to another |
| Privatization | the process of selling business or services operated by the government to individual investors, and then allowing them to compare in the marketplace |
| Free enterprise system | an economic system characterized by individual or corporate ownership of capital goods |
| Profit motive | the incentive that drives individuals and business owners to improve their material well-being |
| Open opportunity | the principle that anyone can complete in the marketplace |
| Legal equality | the principle that everyone has the same legal rights |
| Private property rights | the principle that people have the right to control their possessions and use them as they wish |
| Free contract | the principle that people may decide what agreements they want to enter into |
| Voluntary exchange | the principle that people may decide what, when, and how they want to buy and sell |
| Interest group | a private organization that tries to persuade public officials to act in ways that benefit its members |
| Patriotism | love of one's country |
| Eminent domain | a right of a government to take private property for public use |
| Public interest | the concerns of society as a whole |
| Public disclosure laws | laws requiring companies to provide information about their products or services |
| Macroeconomics | the study of economic behavior and decision-making in a nation's whole economy |
| Microeconomics | the study of the economic behavior and decision-making in small units, such as households and firms |
| Gross domestic product | the total value of all final goods and services produced in a country in a given year |
| Business cycle | a period of macroeconomic expansion, or growth, followed by one of contraction, or decline |
| Referendums | a proposed law submitted directly to the public |
| Obsolescence | situation in which older products and processes become out-of-date |
| Patent | a government license that gives the inventor of a new product the exclusive right to produce and sell it |
| Copyright | a government license that grants an author exclusive rights to publish and sell creative works |
| Work ethic | a commitment to the value of work |
| Public good | a shared good or service for which it would be inefficient or impractical to make consumers pay individually and to exclude those who did not pay |
| Public sector | the part of the economy that involves the transactions of the government |
| Private sector | the part of the economy that involves the transactions of individuals and businesses |
| Infrastructure | the basic facilities that are necessary for a society to function and grow |
| Free rider | someone who would not be willing to pay for a certain good or service but would get the benefits of it anyway if it were provided as a public good |
| Market failure | a situation in which the free market, operating on its own, does not distribute resources efficiently |
| Externality | an economic side effect of a good or service that generates benefits or costs to someone other than the person deciding how much to produce or consume |
| Poverty threshold | an income level below that which is needed to support families or households |
| Welfare | government aid to the poor |
| Cash transfers | direct payments of money by the government to poor, disabled, or retired people |
| In-kind benefits | goods and services provided for free or at greatly reduced prices |
| Grant | a financial award given by a government agency to a private individual or group in order to carry out a specific task |
Created by:
VKimbrell718
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