Final Flashcards
Difference between a need and a want
A need is something you have to have to survive. A want is something that you would like to have, but you do not need it to survive
What is economics?
The study if peoples needs and wants
Example of good
A jacket
Example of a service
A haircut
Factors of production
Land, labor, capital
Physical and human capital
Physical- all human made goods that are used to produce other goods and services.
Human- the skills and knowledge gained by a worker through education and experience
Key economic questions
What am I going to make?
How am I going to make it?
Who am I going to sell it to?
Economic system
The method used by society to produce and distribute goods and services.
Economy of the Soviet Union
Centrally planned. The government controlled everything in the economy.
5,14,16 amendments
Private property
Contractural agreements
Over taxation
Macroeconomics v. Microeconomics
Macro- the study if the behavior of a huge economy like the economy of a state or nation.
Micro- the study of the behavior of a small economy, like a household or small business.
Standard of living
Level of economic prosperity
Public good
A shared good or service for which it would be impractical to make consumers pay individually and to exclude no payers
Externalities
Negative- when there is a neighbor who has a ghetto lawn and he refuses to fix it. So it lowers the price value of all the nearby homes.
Positive- when there is a neighbor who has a ghetto lawn but he fixes it up and the price value of all the surrounding homes goes up.
Supply and demand
Supply- the amount of a good or service available
Demand- the amount wanted
Normal good v inferior good
Normal- a good that everyone buys when they can afford it
Inferior- when you but a better, different good because of an increase in income
Elasticity of supply and demand
Supply- companies can change the prices of the good
Demand- people can choose to still buy the good when the price changes
Total revenue
The total amount of money a firm receives by selling goods or services
Fixed costs v. Variable costs
Fixed- the price is always the same
Variable- the price changes
Equilibrium
When the demand and supply is equal
How do firms prices respond to shortages and surpluses?
Shortages- they make the price go up
Surpluses- they make the price go down so they can sell more
Rationing
A system of allocating scarce goods and services using criteria other than price
Perfect competition, monopolies, and monopolistic competition
Perfect- when many firms make basically the same product
Monopolies- when one firm controls and makes the only product of that kind
Monopolistic- when a few firms make goods that are almost the same
Commodities
A product that is the same no matter who produces it
Barriers to entry
Something that can hold you back from entering the market. Ex. Start up costs
Oligopoly
A market dominated by a few large, profitable firms
Market power
You can control certain things within the market, like prices
Price discrimination
Divisions of customers into groups based on how much they will pay for a good
Business organization
When people come together and open up a business that provides something that other people need or want
Sole proprietorship
A business that is owned and managed by a single individual
Types of partnerships
General- partnership in which partners share equally in both responsibility and liability
Limited- partnership in which only one partner is required to be a general partner
Corporate characters and articles of partnership
Articles of partnership- a partnership agreement
Bureau of labor statistics
Responsible for labor statistics
Contingent employment
A temporary employment/job
Different job categories
Professional
Skilled
Unskilled
Blue collar v white collar
Blue- industrial jobs, janitors, etc
White- professional jobs, doctors
Mediation v arbitration
Mediation- where two parties are negotiating for something and a third party comes in and offers advise for both sides
Arbitration- where two parties are negotiating for something and a third party comes in and make the decision for both parties and they can’t do anything about it
Tyler of mergers
Horizontal- the combination of two or more firms competing in the same market with the same good or service
Vertical- the combination of two or more firms involved in different stages of producing the same good or service
Conglomerate- business combination merging more than three businesses that make unrelated products
Glass ceiling
An unofficial, invisible barrier that prevents women and minorities from advancing in business dominated by white men
Money and characteristics of money
Anything that serves as a medium of exchange, a unit of account, and a store of value Durability Portability Divisibility Uniformity Limited supply Acceptability
Federal reserve banking
Our national banking system; all our money in the economy
Fractional reserve banking
A banking system that keeps only a fraction of funds on hand and lends out the remainder
Financial assets
Claim on the property or income of a borrower
Financial intermediaries
Institution that helps channels funds from savers to borrowers
Types of bonds
Savings
Municipal
Corporate
New York Stick exchange
Is not an OTC exchange
The Dow and s and p 500
Dow- only shows the stats of the top 30 companies
S and p 500- shows the stats of 500 companies
Stockholders
Someone who holds stock
Types of employment
Frictional
Seasonal
Structural
Cyclical
Unemployment rate
The percentage of the nations labor force that is unemployed
Underemployment
Working at a job for which one is over qualified or working part time when full time is desired
Inflation
A general increase in prices
Market basket
A representative collection of goods and services
Family v. Household
Family- two or more people living together under the same roof where they are related by birth, marriage, or adoption.
Household- two or more people living in the same housing unit, regardless of affiliation
Wage price spiral
The process by which rising wages cause higher prices and higher prices cause higher wages
Poverty threshold
The income level below which income is insufficient to support a family or household
Causes of poverty
Lack of education Location Racial or gender discrimination Economic shifts Shifts in family structure
Discouraged worker
A person who wants a job but has stopped looking
