Economics Flashcards
circular flow
the interaction btw those that make economic decisions (households/ businesses) and those that provide goods and services
supply
what producers make
demand
what consumers ask/want
law of supply
price increase - quantity increases
producers benefit from high price
law of demand
price increase - quantity decreases
consumers harmed by high opportunity cost
cost benefit analysis
the gains and loses of an economic decision
factor market
market where factors of production are bought/sold
trade cap
limits the amount of imported/exported gods
Consumer Price Index (CPI)
measures country’s economy based on how much consumers spend
laissez faire
Adam Smith’s invisible hand where gov does not interfere with economy
factors of production
land, labor, entrepreneur, capital
absolute advantage
who can produce more of a good service with the same amount of resources
comparative advantage
who can produce a good or service at a lower opportunity cost than others
surplus
having too much of a good`
perceived value
how desirable a product is to a consumer
market economy
privately owned businesses
traditional economy
goods and services made by each family and they can exchange to gain other goods
mixed economy
privately owned businesses operate under gov regulation
command economy
gov controls economy
trade deficit
buying more than selling
price ceiling
max price for good regulated by gov
Supply Side Economics/ Reaganomics
gov intervention should help producers supply more
Disequilibrium
having too much of a supply or having too much demand
Gross Domestic Product (GDP)
everything a country makes in a year
economies of scale
price fall due to increase in production
deficit
not having enough of supply
specialization/division of labor
companies specialize in making the best product to make the most money and get other goods through trade
Keynesian economics
dividend
percentage of profit
share
small percentage of the company
means of production
non-human resources used to produce (tools)
labor force
everyone that works, wants to work
subsidies
gov pays industry to reduce costs
stock market
buy and sell company shares
free trade
country can trade with other countries without restrictions
