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EPF Flashcard List 2
| Term | Definition |
|---|---|
| markets | places where voluntary exchanges occur, individuals voluntarily buy and sell goods and services here, which sets prices |
| consumer sovereignty | the people are "king" because they determine what products will be produced by businesses and corporations, and what will be consumed after they are produced |
| competition | the constant struggle that goes on between businesses to get your business/money, guarantees that consumers get high quality products at low prices |
| perfect competition | the situation prevailing in a market in which buyers and sellers are so numerous and well informed that all elements of monopoly are absent and the market price of a commodity is beyond the control of individual buyers and sellers |
| monopoly | when the market creates one provider of goods and services, competition does not exist, guarantees that consumers get lower quality products at higher prices |
| monopolistic competition | occurs when an industry has many firms offering products that are similar, but not identical. unlike a monopoly, these firms have little power to curtail supply or raise prices to increase profits |
| oligopoly | a state of limited competition, in which a market is shared by a small number of producers or sellers who fix prices in an attempt to increase their profits |
| private property rights | the freedom to own and use our property as we choose, as long as we do not interfere with the rights of others, a powerful incentive to work hard and save money |
| profit/profit motive | money that is left over after all expenses have been paid, major incentive that forces individuals and organizations to innovate and to be efficient |
| incentives | something that motivates or encourages someone to do something that they normally would not do, purpose is often to stimulate greater output or investment |
| voluntary exchange | involves buyers and sellers freely and willingly engaging in market transactions. you exchange your money for a product because you think that you will benefit from it |
| needs | requirements for survival |
| wants | something that we would like to have that makes life comfortable and enjoyable |
| alternatives | products and services that we choose to use when limited resources prevent us from consuming our primary choice |
| opportunity costs | the loss of potential gain from other alternatives when one alternative is chosen (typically money, time, effort, and satisfaction) |
| the four factors of production | resources that are used to make goods and/or provide services |
| natural resources | the gifts of nature that make production possible |
| labor | human efforts directed towards producing goods and providing services |
| capital | wealth in the form of money or other assets owned by a person or organization, which are available for a particular purpose such as starting a company or producing goods or services |
| entrepreneurs | an individual who starts a new business, introduces a new product, or improves existing business practices, they take a risk in an attempt to turn a profit |
| capital goods | goods that are used to produce other goods, rather than being bought by consumers |
| consumer goods | goods bought and used by consumers, rather than being bought by manufacturers for producing other goods |
| services | working for, or helping someone else |
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jacqbas
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