Chapter 5 Terms

Question 1

Market

Answer 1

• A place where goods and services are bought and sold

- A meeting of people who are interested in buying and selling

Question 2

Market Signals

Answer 2

• Signs that are used by consumers and producers to determine how much of a good to buy or sell at a given price and time

Question 3

Non-durable Goods

Answer 3

• Goods that have a life expectancy of less than three years

Question 4

Durable Goods

Answer 4

• Goods which are expected to last at least three years

Question 5

In a ________________, the ________ determine what ____ are being produced and in what ________.

Answer 5

1. Free Market Economy
2. Consumers
3. Goods
4. Quantity

Question 6

Traditional Economic Economy

Answer 6

• Very simple economy

Question 7

Command Economy

Answer 7

• Ruled by a centralized government

Question 8

Black Markets

Answer 8

• An alternative, illegal system for exchanging goods to avoid governmental regulations

Question 9

Private Sector

Answer 9

• That part of an economy that is controlled by private individuals, businesses, and organizations

Question 10

Public Sector

Answer 10

• That part of an economy that is controlled by national, state, and local governments

Question 11

Profit Motive

Answer 11

The desire to improve one’s economic situation

Question 12

Depreciation

Answer 12

• The diminishing of the value of goods that is caused by wear and time

Question 13

Profit

Answer 13

• The excess of the total revenue paid by buyers for goods over the seller’s total expense of producing those goods

Question 14

Opportunity Cost

Answer 14

• The value of the best alternative that is foregone when a different alternative is taken

Question 15

Equity

Answer 15

• The total value of a business minus any liabilities