Econ Semester Review Flashcards
a situation that exists when there are not enough resources to meet human wants
scarcity
the value of something that is given up by choosing one alternative over another
opportunity cost
the economic resources needed to produce goods and services
land, labor, capital, entrepreneurship
factors of production
the condition in which economic resources are used to produce the maximum amount of goods/services
efficiency
combination of vision, skill, ingenuity, and willingness to take risks needed to create/run new businesses
entrepreneurship
the benefit/satisfaction gained from using one or more unit(s) of a good or service
marginal benefit
the additional cost of producing or using on more unit of a good or service
marginal cost
wrote “The Communist Manifesto”
socialism economic theory
Karl Marx
the change from private ownership to government or public ownership (government takes over all businesses)
nationalizing
based on individual choice and voluntary exchange
market system
government makes all economic decisions
command system
money distributed to taxpayers who do not provide goods or services in return
transfer payments
government economic/social programs that provide assistance to the needy
welfare
goods and services provided by the government and consumed by the public as a group
public goods
visualization of all interactions in a market economy
circular flow model
change in price = larger change in quantity demanded or supplied
elasticity
quantity demanded/supplied changes little as price changes
inelastic
willingness and ability of a producer to produce and sell a product
supply
desire to have some good or service and the ability to pay for it
demand
graph that shows data from a supply schedule
supply curve
graph that shows a demand schedule, or how much of a good or service an individual is willing and able to purchase at each price
demand curve
states that when the price of a good or service goes down, quantity demanded increases, and vise versa
law of demand
producers are willing to sell more of a good or service at a higher price than they are at a lower prices
law of supply
an established minimum price that buyers must pay for a product
price floor
an established maximum prices that sellers may charge for a product
price ceiling
expenses that business owners incur no matter how much they produce
fixed costs
business costs that vary with the level of production output
variable costs
products used together so the increase or decrease in demand for one will result in an increase or decrease in demand for the other
complementary goods
the money made from each additional unit sold
marginal revenue
the amount of goods or services a person can produce in a given time
labor productivity
a situation in which supply is greater than demand (usually the result of prices set too high)
surplus
a situation in which demand is greater than supply (usually the result of prices set too low)
shortage
price at which quantity demanded equals quantity supplied
equilibrium
ideal model of a market economy - none of the many well-informed/independent buyers or sellers has control or price over a standardized good/service
perfect competition
market structure in which only a few sellers offer a similar product
oligopoly
market structure in which many sellers offer similar but not standardized products to consumers
monopolistic competition
market structure in which only one seller sells a product for there are no close substitutes
monopoly
the practice of contracting with an outside company, often in a foreign country, to provide goods or services
outsourcing
the process of negotiation between a business and its organized employees to establish wages and improve working conditions
collective bargaining
the gross domestic product corrected for changes in prices from year to year
real GDP
the gross domestic product states in terms for the current value of goods and services
nominal GDP
an increase in economic activity
expansion
a decrease in economic activity
contraction
jobless labor forces that are actively looking for work
unemployment
when a person’s income and resources do not allow them to achieve a minimum standard of living
poverty
a sustained rise in the general price level, or a sustained fall in the purchasing power of money
inflation
the federal government’s use of taxing and spending to affect the economy
fiscal policy
the Federal Reserve’s actions that change the money supply to influence the economy
monetary policy
a plan to stimulate aggregate demand
demand-side policy
a plan designed to provide incentives to producers to increase aggregate supply
supple-side policy
the government practice of spending more than it collects in revenue for a specific fiscal year
deficit
the central bank of the United States
the Fed
the board of 7 appointed members that supervises the operations of the Federal Reserve System and sets monetary policy
Board of Governors
the series of growing and shrinking periods of economic activity, measured by increases or decreases in real GDP
business cycle
countries gain when they produce items they are most efficient at producing at the lowest opportunity cost
law of comparative advantage
the ability of one trading nation to make a product more efficiently than another trading nation
absolute advantage
a limit on the amount o product that can be imported
quota
a fee charged for goods brought into a country from another country
tariff
a nation’s GDP divided by total population
per capita
an economic system based on private ownership of the factors of production
capitalism
an economic system in which there is no private ownership of property and little or no political freedom
communism
the financial gain a seller makes from a business transaction
profit
a long-term bond that matures in 30 years
treasury bonds
a short-term bond that matures in less than one year
treasury bills
