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economic 0305
economics for smart citizenship
| Question | Answer |
|---|---|
| rational action | the process of thinking through before making a decision |
| wants | what can be fulfilled by acquiring goods and services |
| labor | people working |
| capital | tools and equipment used for prouduction |
| financial capital | funds to acquire capital goods |
| entreprenership | risk taking |
| making profit | goal of business |
| production | the transformation process |
| efficiency | maximum output at lowest cost |
| technologh | application of knomledge |
| scarcity | limited resources unlimitrd wants and needs |
| cost benefit analysis | evaluation of whether or not to take the next step |
| marginal cost(mc) | cost of taking the next step |
| marginal benefit | benefit of taking the net step |
| opportunity cost | alternative forgone when you make a decision |
| market capitalist economy | consumer decides what gets produced |
| command dictatorship economy | decisions are made by the ruling elite |
| private property | individual ownership of farms,factories and homes |
| the "invisible hand" | description of how self-interested activity benefits society by adam smith |
| production possibilities | what society can produce |
| economic growth | more production to satisfy wants and needs |
| goods and services | things people buy |
| price floor | government imposed minimum price |
| complementary goods | goods used together |
| shortage | excess of demand over supply |
| law of demand | price increases,quantity demanded decreases |
| barter | direct trade of one item for another without money |
| market equilibrium | quantity demanded equals quantity supplied no surplus or shortage |
| surplus | excess or supply over demanded |
| price ceiling | government imposed maximum price |
| price | rate of exchange for trade |
| demand | behavior of buyers |
| income effect | as prices change,buyers' incomes change |
| substitution | switching frome one good to another similar good with a lower price |
| law of supply | price increases,quantity supplied increases |
| supply curve | a curve showing the quantities that sellers are willing and able to sell at each particular price |
| buyers(consumers) | people willing and able to exchange money to acquire a particular amount of good or service |
| supply | behavior of seller |
| sellers(producers) | people willing to exchange a particular amount of good or service for money |
| market | what occurs when buyers and seller interact |
| substitute good | a good with similar qualities to another good that can take its place |
| demand curve | a curve showing the quantity that buyers are willing and able to buy at each particular price |
| who bears the burden of tax | the ultimate bearer of the cost of a tax,rather than who writes the check |
| characteristics of goods with elastc demand | substitutes readily available,large price tag compared to income,item not needed right away |
| characteristics of goods with inelastic demand | no substitutes available,small price tag compared to income,item need right away |
| consumer equilibrium | a state where the ratio of value to cost is the same over the entire range of goods for possible consumption |
| consumption spending | the purchase of goods and services by consumers |
| diamond-water paradox | a demonstration of the fact that some products have higher marginal utility and lower total utility |
| disposable income | consumers after-tax income or take-home pay |
| durable goods | items that are expected to last three years or more |
| elasticity of demand | a measure of the intensity of consumer response to price change |
| elasticity of supply | a measure of the intensity of producer response to a price change |
| formula for elasticity | %change in quantity %change in price |
| law of diminishing marginal utility | additional units of a good consumed in one setting each give ue less satisfaction or pleasure |
| loss leader | lowering the price of a good to get consumers "in the store" |
| marginal cost | the added cost of obtaining one more unit of a good |
| marginal utility | the added utility we get from consuming one more unit of a good |
| non durable goods | items to be used up in less than three years |
| services | activities that consumers pay somebody else to do for them |
| sources of purchasing power | selling land,labor,capital and entrepreneurship resources |
| total utility | the sum of all the utility we obtain when we consume a series of goods |
| utility | the pleasure,satisfaction or usefulness we get from consumption |
| accounting profit | total revenue less explicit costs |
| average costs(fc,vc or tc) | fc,vc or tc divided by quantity produced |
| conglomerate merger | a combination of two firms in unrelated industries |
| corporation | a legal entity owned by shareholders,who are shielded from liabilities.the legal entity owns the assets of a business and is obligated to pay the liabilities |
| costs | money and nonmonetary cost of inputs,services and operation |
| economic profit | total revenue less explicit and implicit costs |
| implicit costs | opportunity cost of the owner's assets,time and efforts used in a business |
| fixed costs(fc) | costs that do not change when the level of output changes |
| horizontal merger | a combination of two firms in the same business or industry |
| explicit costs | actual out-of-pocket payments of the business plus depreciation |
Created by:
nfarshid1
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