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
Sole Proprietorships
business owned and managed by a SINGLE individual. this person is responsible for all of the company’s profits- 75% of all businesses are sole proprietorships yet they only generate 6% of all United States sales
General Partnership
everything is shared equally
Limited Partnership
one person manages everything and one person only invests money
Stock
equities (share) confer an ownership interest in a particular company
Publicly Held Corporation
many shareholders who can buy and sell stock on the open market - ex:Apple
Private Corporation
only a small group of people hold stock (maybe just family members)-ex: In N Out
Multinational Corporations
corporations that operate in more than one country at a time
Globalization
the growing connectedness of different countries of the world (their economies, culture, government/politics, diseases
50/30/20
suggests you spend about 50% of your monthly after-tax income on necessities, 30% on wants and 20% on savings and paying off debt.
Zero Based Budgeting
a strategy that allocates every dollar you make. Your goal is to ensure that income minus all your expenses equals exactly zero at the end of the month.
Deductions/ Write-Offs
help move you into a lower tax bracket which means you will pay less in taxes
