Exam #1 Vocab Flashcards
capital
Final goods used in the production of other goods. Ex: exquipment, structures, etc.
capital-intensive
Production processes that use a high ratio of capital to labor inputs.
ceteris paribus
The assumption of nothing else changing.
comparative advantage
The ability of a country to produce a specific good at a lower opportunity cost than its trading partners.
complementary goods
Goods frequently consumed in combination; when the price of x rises, the demand for good y falls, ceteris paribus.
demand
The ability and willingness to buy specific quantities of a good at alternate prices in a given time period, ceteris paribus.
demand curve
A curve describing the quantities of a good a consumer is willing and able to buy at alternative prices in a given time period, ceteris paribus.
demand schedule
A table showing the quantities of a good a consumer is willing and able to buy at alternative prices in a given time period, ceteris paribus.
economic growth
An increase in output (read GDP); an expansion of production possibilities.
economics
The study of how best to allocate scarce resources among competing uses.
efficiency
Maximum output of a good from the resources used in production.
entrepreneurship
The assembling of resources to produce new or improved products and technologies.
equilibrium price
The price at which the quantity of a good demanded in a given time period equals the quantity supplied.
exports
Goods and services sold to foreign buyers.
externalities
Costs (or benefits) of a market activity borne by a third party.
factor market
Any place where factors of production (ex: land, labor, capital) are bought and sold.
factors of production
Resource inputs used to produce goods and services, such as land, labor, capital, and entrepreneurship.
government failure
Government intervention that fails to improve economic outcomes.
gross domestic product (GDP)
The total market value of all final goods and services produced within a nation’s borders in a given time period.
human capital
The knowledge and skills possessed by the workforce.
imports
Goods and services purchased from foreign sources.
income quintile
One-fifth of the population, rank-ordered by income (ex: top fifth).
income transfers
Payments to individuals for which no current goods or services are exchanged, ex: Social Security, welfare, unemployment benefits.
investment
Expenditures on (production of) new plant, equipment, and structures (capital) in a given time period, plus changes in business inventories.
laissez faire
The doctrine of “leave it alone”, of nonintervention by government in the market mechanism.
law of demand
The quantity of a good demanded in a given time period increases as its price falls, ceteris paribus.
law of supply
The quantity of a good supplied in a given time period increases as its price increases, ceteris paribus.
macroeconomics
The study of aggregate economic behavior, of the economy as a whole.
market demand
The total quantities of a good or service people are willing and able to buy at altenative prices in a given time period; the sum of individual demands.
market failure
An imperfection in the market mechanism that prevents optimal outcomes.
market mechanism
The use of market prices and sales to signal desired outputs (0r resource allocations).
market shortage
The amount by which the quantity demanded exceeds the quantity supplied at a given price; excess demand.
market supply
The total quantities of a good that sellers are willing and able to sell at alternative prices in a given time period, ceteris paribus.
market surplus
The amount by which the quantity supplied exceeds the quantity demanded at a given price; excess supply.
microeconomics
The study of individual behavior in the economy, of the components of the larger economy.
mixed economy
An economy that uses both market signals and government directives to allocate goods and resources.
monopoly
A firm that produces the entire market supply of a particular good or service.
net exports
The value of exports minus the value of imports.
opportunity cost
The most desired goods or services that are forgone to obtain something else.
per capita GDP
The dollar value of GDP divided by the total population; average GDP.
price ceiling
Upper limit imposed on the price of a good.
price floor
Lower limit set for the price of a good.
product market
Any place where finished goods and services (products) are bought and sold.
production possibilities
The alternative combinations of final goods and services that could be produced in a given time period with all avaliable resources and technology.
productivity
Output per unit of input, such as output per labor-hour.
scarcity
Lack of enough resources to satisfy all desired uses of those resources.
shift in demand
A change in the quantity demanded at any (every) given price.
substitute goods
Goods that substitute for each other; when the price of good x rises, the demand for good y increases, ceteris paribus.
supply
The ability and willingness to sell (produce) specific quantities of a good at alternative prices in a given time period, ceteris parabus.
