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Econ Exam-09
Econ Exam-09 Christmas, Janousky
| Question | Answer |
|---|---|
| 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| disincentive | a negative or withdrawn reward |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 |
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