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EPF M5 Review
Economics & Personal Finance Module 5 Review
Term | Definition |
---|---|
Economics | The study of how we make decisions in a world of limited resources. |
Microeconomics | Studying the economic decisions made by individuals and businesses. |
Macroeconomics | Studying the economy as a whole and decisions made by larger units such as the government or entire industries. |
Opportunity Cost | The cost of the next best alternative use of time or money when choosing to do one thing instead of another. |
Resource | Something used to make something else. |
Economic Model | Charts, graphs, or another representation used to help us make economic decisions. |
Trade-off | The alternative you face if you decide to do one thing rather than another. |
Marginal Cost | The cost of producing one more of an item. |
Marginal Benefit | The benefit or money made from producing one more of an item. |
Cost-Benefit Analysis | A comparison of the cost of production versus the benefit of production. |
Fixed Costs | Expenses that are the same no matter how much or how little you produce. |
Variable Costs | Expenses that change when the number of items produced changes. |
Total Costs | Fixed costs plus variable costs equal total costs. |
Goods | Goods are products that we use to satisfy our wants and needs. |
Services | Services are work performed by a person for someone else. |
Factors of Production | Resources needed to produce goods and services. |
Natural Resources | Things we find in nature used to make goods or services. |
Laissez-Faire Economics | The government does not regulate the economy or is “hands-off.” |
Labor | The human effort used to produce goods or services. |
Capital | Previously manufactured goods used to make new goods and services. |
Entrepreneur | People who start a business or invent a new product. |
Traditional Economy | An economic system in which people do things the way they have always been done which emphasizes the trading and bartering of products and services. |
Command Economy | An economic system in which the government owns all the factors of production (land, factories) and makes all the decisions. |
Market Economy | These are also called capitalist economies. It is an economic system in which citizens own the factors of production. In a market economy, supply (what producers offer for sale) and demand (what consumers are able and willing to buy) determine what producers produce and how much they produce. |
Mixed Economy | An economic system that combines elements of a command and market economy. |
Wants | Things we would like to have. |
Needs | Things that are necessary for survival. |
Invisible Hand | The idea that there are unseen motivations for producers and consumers that cause a market economy function for the best interest of everyone. |
Human Capital | Investing in employees to help in the production of goods and services. |
Republic | Ruled by the people typically through a representative body and governed by a Constitution. |
Constitutional Monarchy | When a monarch is limited by a Constitution and often serves as a symbolic leader of their country. |
Anarchy | The absence of a governing body. |
Absolute Monarchy | Rule by a King or Queen, power is passed down hereditarily, without limits. |
Communism | Type of command economy when one political party holds power and makes all the economic decisions with the stated goal of making progress towards greater economic equality. There is no private ownership or social class distinctions. The production of goods is to provide for basic needs. |
Socialism | Type of command economy in which a government owns the factors of production and states to seek a more fair distribution of property and labor. There is limited private ownership and limited social class distinctions. The production of goods is to provide for societal needs. |
Gross Domestic Product | The total value of all the final goods and services produced in a country in a single year. |
Standard of Living | The quality of life of people in a country. |
Market | Free exchange of goods and services between buyers and sellers. |
Circular Flow of the Economy | An economic model that shows how goods, services, and money move in an economy. |
Factor Market | Where productive resources are bought and sold. |
Product Market | Markets where producers offer goods and services for sale. |
Productivity | Measure of the output or goods produced based on the input. |
Division of Labor | Breaking down a job into several smaller tasks. |
Specialization | When a person or business focuses on what they can make better than the others. |
Free Enterprise | Businesses are allowed to compete with little or no interference. |
Capitalism | Economic system in which citizens own and use factors of production. |
Private Property Rights | People have the right to own and use property as they see fit. |
Laissez Faire | French term meaning “to let alone.” Government should not interfere with business. |
Profit | The amount of money left over after all the costs of production have been paid. |
Profit Motive | What encourages people to take the risk to open a business or engage in other economic activities. |
Competition | The struggle between buyers and sellers to get the best products at the lowest prices. |
Monopoly | Exists when there is only one producer of a good or service. |
Oligopoly | When a few businesses are the only providers of a good or service. |
Monopolistic Competition | Exists when there are a few producers of a good or service but the products are not identical. |
Pure Competition | Exists when they are a large number of sellers producing identical products. |
Demand | The want, willingness, and resources to buy a good or service. |
Supply | The amount of goods and services a producer is willing to make at a certain time. |
Market | The place where people trade goods and services for money. |
Market Equilibrium Price | The point where supply and demand reach a balance. |
Surplus | The amount of goods left over when the number supplied is greater than the number demanded. |
Shortage | The amount of goods demanded which is greater than the number of goods produced. |
Sole Proprietorship | A business owned and operated by one person. |
Partnership | A business organization owned by two or more people. |
Corporation | A business owned by individual stockholders. |
Financial Capital | Assets needed by a company to provide goods or services, as measured in terms of money value. |
Stock | A certified ownership in a corporation. |
Stockholders | Part owners of the corporation. |
Dividend | Profits paid out to stockholders. |
Cooperative | A business or firm that is owned and ran jointly by its members, who share the profits and benefits. |
Labor Union | An organization that negotiates workers benefits, salaries, and working conditions with the employer. |
Right to Work Laws | A law that restricts union membership, NC is a right to work state. |
Boycott | The refusal to buy or use the goods or services of a certain company as a means to protest. |
Arbitration | A third party listens to both sides of an argument and provides a binding decision. |
Mediation | A third party listens to both sides of an argument and recommends a solution. |
Strike | When workers collectively stop working to force the employer to meet their demands. |
Collective Bargaining | Negotiations between the company and the labor union. |