Economics keyterms #3 Flashcards
From online textbook
Define centrally planned
economy
decisions on resource allocation are guided by the state
Define mixed economy
resources are allocated partly through price
signals and partly on the basis of direction by government
Define transition economies
countries that moved from central planning to being a mixed economy
Define production possibility
curve (PPC)
a curve showing the maximum combinations of goods or services that can be produced in a set period of time given available resources and the state of technology
Define investment( include what type of goods)
expenditure undertaken by firms to add to
the capital stock; an increase in the capital
. (capital goods)
What are capital goods? (give two examples)
goods that are to be used to increase the future capacity of the economy.(for example: machinery, factories)
Define consumption ( include what type of goods)
household spending on goods and services in the economy. (consumer goods)
What are consumer goods( give two examples)
goods that people consume for present use ( for example: apples, televisions)
Define potential economic
growth
an expansion in the productive capacity
of the economy
Define Private goods( or also economic goods)
Goods which are scarce are known as private goods. Most goods fall in this category.
Define Free goods
Something natural like the earth’s atmosphere and water, which would not be usually considered scarce
Define free-rider problem
when an individual cannot be excluded from consuming a good, and thus has no incentive to pay for its provision.
Define Merit goods
a good that brings unanticipated
benefits to consumers, such that society
believes it will be underconsumed in a
free market.
Define Demerit
a good that brings less benefit
to consumers than they expect, such that too much will be consumed by individuals in a freemarket.
