Economic part1 Flashcards
An item that we desire but that is not essential to survival
Want
Something like air, food, or shelter that is necessary for survival
Need
The study of how people seek to satisfy their needs and wants by making choices
Economics
Physical objects such as clothes or shoes
Goods
Actions or activities one person performs for another
Services
Limited quantities of resources to meet unlimited wants
Scarcity
A situation in which a good or service is unavailable, or a situation in which the quantity demanded is greater than the quantity supplied, also know as excess demand
Shortage
Land, labor, and capital; the three groups of resources that’s are used to make all goods and services
Factors of Production
The effort that people devote to a task for which they are paid
Labor
Any human made resource that is used to create other goods or services
Capital
Ambitious leader who combines land, labor, and capital to create and market new goods and services
Entrepreneur
Using fewer resources than an economy is capable of using
Underutilization
As we shift factors of production from making one good or service to another, the cost producing the second item increases
Law of increasing costs
The income people receive for supplying factors of production: land, labor, or capital
Factor payments
Government programs that protect people experiencing unfavorable economic conditions
Safety Net
Level of economic prosperity
Standard of living
Economic system that relies on habit, custom, or ritual to decide questions of production and consumption of goods and services
Traditional Economy
Economic system in which decisions on production and consumption of goods and services are based on voluntary exchange in markets
Market economy
Economic system in which the central government makes all decisions on the production and consumption of goods and services
Centrally Planned Government
An arrangement that allows buyers and sellers to exchange things
Market
The concentration of the productive efforts of individuals and firms on a limited number of activities
Specialization
A person or group of people living in the same residence
Household
An organization that uses resources to produce a product, which it then sells
Firm
The financial gain made in a transaction
Profit
One’s own personal gain
Self-Intrest
An expectation that encourages people to behave in a certain way
Incentive
The power of the consumers to decide what gets produced
Consumer sovereignty
A social and political philosophy based on the belief that democratic means should be used to evenly distribute wealth throughout a society
Socialism
A political system characterized by a centrally planned economy with all economic and political power resting in the hands of the central government
Communism
Large farm leased from that state to groups of peasant farmers
Collective
An economic system characterized by private or corporate ownership of capital goods; investments that are determined by private decisions rather than by state control; and determined in a free market
Free enterprise
To sell to individuals state-run firms, which are then allowed to compete with one another in the marketplace
Privatize
The force that encourages people and organizations to improve their material well being
Profit motive
The concept that people may decide what agreements they want to enter into
Free contract
The struggle among producers for the dollars of consumers; the rivalry among sellers to attract customers while lowering costs
Competition
Laws requiring companies to provide full information about their products
Public Disclosure Laws
The total value of all final goods and services produced in a particular economy; the dollar value of all final goods and services produced within a country’s borders in a given year
Gross Domestic Product (GDP)
A period of macroeconomic expansion followed by a period of contraction
Business Cycle
A commitment to the value of work and purposeful activity; system of values that gives central importance to work
Work ethic
The process used to produce a good or service
Technology
A shared good or service for which it would be impractical to make consumers pay individually and to exclude nonpayers
Public good
The part of the economy that involves the transactions of individuals and businesses
Private sector
Someone who would not choose to pay for a certain good or service, but who would get the benefits of it anyway if it were provided as a public good
Free rider