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Unit One Econ
Unit One Econ (Quizlet)
| Term | Definition |
|---|---|
| Scarcity | A situation in which unlimited wants exceed the limited resources available to fulfill those wants |
| Microeconomics | the study of how households and firms make decisions and how they interact in markets |
| Macroeconomics | the study of economy-wide phenomena, including inflation, unemployment, and economic growth |
| economic model | a simplified version of reality used to analyze real-world economic situations |
| marginal analysis | analysis that involves comparing marginal benefits and marginal costs |
| Law of Diminishing Marginal Returns | As more of a variable resource is added to a given amount of a fixed resource, marginal product eventually declines and could become negative |
| opportunity cost | the most desirable alternative given up as the result of a decision |
| production possibilities curve | a graph that shows alternative ways to use an economy's productive resources |
| production possibilities frontier | a graph that shows the combinations of output that the economy can possibly produce given the available factors of production and the available production technology |
| positive incentive | a reward or other enticement that encourages a behavior |
| negative incentive | a penalty that discourages a behavior |
| Adam Smith | Scottish economist who wrote the Wealth of Nations a precursor to modern Capitalism. |
| Capitalism | An economic system based on private ownership of capital |
| Invisible Hand Theory | Adam Smith's theory that the actions of independent, self-interested buyers and sellers will often result in the most efficient allocation of resources |
| Laissez-faire economics | Theory that opposes governmental interference in economic affairs beyond what is necessary to protect life and property. |
| voluntary exchange | the act of buyers and sellers freely and willingly engaging in market transactions |
| Karl Marx | Father of Communism |
| centrally planned economy | an economy in which the government decides how economic resources will be allocated |
| Communism | A theory or system of social organization based on the holding of all property in common, actual ownership being ascribed to the community as a whole or to the state. |
| private property | property owned by individuals or companies, not by the government or the people as a whole |
| full employment | the level of employment reached when there is no cyclical unemployment |
| price stability | when the overall level of prices changes slowly or not at all |
| Growth Economics | The process of becoming larger |
| security (economic goal) | stable prices + full employment |
| equity financing | funds provided by the owners of a company |
| efficiency (economic efficiency) | a condition that occurs when all goods and services are produced and consumed at their respective socially optimal levels |
| freedom | the power or right to act, speak, or think as one wants without hindrance or restraint. |
| Economic Goals of the US | economic freedom, economic efficiency, economic equity, economic security, full employment, price stability, economic growth, future goals |
| mixed economy | An economy in which private enterprise exists in combination with a considerable amount of government regulation and promotion. |
| market economy | Economic decisions are made by individuals or the open market. |
| command economy | An economic system in which the government controls a country's economy. |
| Traditional Economic System | A system in which customs handed down from generation to generation determine how a society is organized to produce, distribute, and consume goods and services. |
| Entrepreneurship | Accepting the risk of starting and running a business. |
| Capital | money for investment |
| Labor Economics | deals with the factors that determine wage rates, employment, and unemployment. How do people decide whether to work, how much to work, and at what kind of job? How have the roles of unions and management changed in recent years? |
| land | all natural resources used to produce goods and services |
| factors of production | Land, labor, and capital; the three groups of resources that are used to make all goods and services |
Created by:
Winter4u
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