unit 1 vocab

Question 1

absolute advantage

Answer 1

the ability to produce a good using fewer inputs than another producer

Question 2

business cycle

Answer 2

fluctuations in economic activity, such as production and employment.

Question 3

capital

Answer 3

money for investment

Question 4

ceteris parabus

Answer 4

all things held constant

Question 5

command economy

Answer 5

an economic system in which the government controls a country’s economy

Question 6

comparative advantage

Answer 6

the ability to produce a good at a lower opportunity cost than another producer

Question 7

complements

Answer 7

two goods that are bought and used together

Question 8

constant costs

Answer 8

Marginal costs (per unit) that remain the same regardless of the number of units produced.

Question 9

demand

Answer 9

the quantity of a good or service that consumers are willing and able to buy

Question 10

economic aggregates

Answer 10

economic measures that summarize data across many different markets

Question 11

economic growth

Answer 11

the ability of the economy to increase the production of goods and services

Question 12

economics

Answer 12

The study of how people seek to satisfy their needs and wants by making choices

Question 13

equilibrium price

Answer 13

the price that balances quantity supplied and quantity demanded

Question 14

equilibrium quantity

Answer 14

the quantity supplied and the quantity demanded at the equilibrium price

Question 15

factors of production

Answer 15

Land, labor, and capital; the three groups of resources that are used to make all goods and services

Question 16

fallacy of composition

Answer 16

the incorrect belief that what is true for the individual, or part, must necessarily be true for the group, or the whole

Question 17

individual choise

Answer 17

the decision by an individual of what to do, which necessarily involves a decision of what not to do

Question 18

inferior goods

Answer 18

Goods for which demand tends to fall when income rises.

Question 19

inflation

Answer 19

A general and progressive increase in prices

Question 20

inputs

Answer 20

the resources—such as labor, money, materials, and energy—that are converted into outputs

Question 21

investment

Answer 21

spending on capital equipment, inventories, and structures, including household purchases of new housing

Question 22

law of demand

Answer 22

consumers buy more of a good when its price decreases and less when its price increases

Question 23

law of increasing oppurtunity cost

Answer 23

to produce more of one good, a successively larger amount of the other good must be sacrificed

Question 24

law of supply

Answer 24

Tendency of suppliers to offer more of a good at a higher price

Question 25

macroeconomics

Answer 25

the study of economy-wide phenomena, including inflation, unemployment, and economic growth

Question 26

market demand

Answer 26

the demand by all the consumers of a given good or service

Question 27

market economy

Answer 27

Economic decisions are made by individuals or the open market.

Question 28

market equilibrium

Answer 28

a situation in which quantity demanded equals quantity supplied

Question 29

microeconomics

Answer 29

the study of how households and firms make decisions and how they interact in markets

Question 30

model

Answer 30

A representation of an object or event

Question 31

normal goods

Answer 31

Goods for which demand goes up when income is higher and for which demand goes down when income is lower.

Question 32

normative economics

Answer 32

makes prescriptions about the way the economy should work

Question 33

oppurtunity costs

Answer 33

the most desirable alternative given up as the result of a decision

Question 34

positive economics

Answer 34

the branch of economic analysis that describes the way the economy actually works

Question 35

production possibilites

Answer 35

the alternative combinations of final goods and services that could be produced in a given time period with all available resources and technology

Question 36

quantity demanded

Answer 36

the amount of a good that buyers are willing and able to purchase

Question 37

quantity supplied

Answer 37

the amount of a good that sellers are willing and able to sell

Question 38

recession

Answer 38

A slowdown in a nation’s economy

Question 39

recovery

Answer 39

a rise in business activity after a recession or depression

Question 40

resource

Answer 40

A substance in the environment that is useful to people, is economically and technologically feasible to access, and is socially acceptable to use.

Question 41

scarcity

Answer 41

A situation in which unlimited wants exceed the limited resources available to fulfill those wants

Question 42

specialization

Answer 42

the concentration of the productive efforts of individuals and firms on a limited number of activities

Question 43

substitutes

Answer 43

two goods for which an increase in the price of one leads to an increase in the demand for the other

Question 44

supply

Answer 44

The amount of goods available

Question 45

terms of trade

Answer 45

the ratio at which a country can trade its exports for imports from other countries

Question 46

trough

Answer 46

the lowest point of a transverse wave

Question 47

unemployment

Answer 47

Measures the number of people who are able to work, but do not have a job during a period of time.