Economics Review Flashcards
Economics
the study of how people (and business and governments) seek to satisfy their wants and needs by making choices (due to lites resources)
Factors of Production
resources people use to produce goods and services, building blocks of economy - land, labor, capital, and entrepreneurship
Scarcity
limited availability of a resource in comparison to the limitless wants
Free Market Economy
no government intervention. businesses and consumers decide what gets made, how things get made and who gets the goods/services
Centrally-Planned Economy
government makes ALL economic decisions. the government values equity. everyone gets the SAME
US Mixed Economy
combines centrally planned economy and free market economies. it is a free market economy with some government intervention
Elastic Goods
“sensitive to price change” - if the price triples people will stop buying it!
Inelastic Goods
“insensitive to price change”-if the price triples people will keep buying it
Law of Demand
as the price goes up, less people buy good/service. as price goes down, more people buy good or service
Law of Supply
as price goes up, more is supplied. as price goes down, less is supplied.
Excess Demand
price is set BELOW equilibrium, too many people want the good or service but there are not enough sellers at that price.
Excess Supply
price is set ABOVE equilibrium, too many sellers but there are not enough buyers at that price
Equilibrium
where the supply and demand are matched and prices are stable
Rent Control
legislation that limits rental rates in a city or state
Minimum Wage
wage rate established by collective bargaining or by the government regulation that specifies the lowest rate at which labour may be employed
