Unit 1 Vocabulary Flashcards
the study of scarcity and choice
economics
decisions by individuals about what to do, which necessarily involve decisions about what not to do
individual choice
a system for coordinating a society’s productive and consumptive activities
economy
the decisions of individual producers and consumers largely determine what, how, and for whom to produce, with little government involvement in the decisions
Market economy
industry is publicly owned and a central authority makes production and consumption decisions
command economy
rewards or punishments that motivate particular choices
incentives
establish ownership and grant individuals the right to trade goods and services with each other
property rights
is the study of costs and benefits of doing a little bit more of an activity vs. a little bit less
marginal analysis
anything that can be used to produce something else
resource
all resources that come from nature, such as minerals, timber, and petroleum
land
the effort of workers
labor
manufactured goods used to make other goods and services
capital
the efforts of entrepreneurs in organizing resources for production, taking risks to create new enterprises, and innovating to develop new products and production processes`
entrepreneurship
not available in sufficient quantities to satisfy all the various ways a society wants to use it
scarce resource
the value of the next best alternative that you must give up in order to get the item
opportunity cost
the study of how individuals, households, and firms make decisions and how those decisions interact
microeconomics
concerned with the overall ups and downs of the economy
macroeconomics
economic measures that summarize data across many different markets
economic aggregates
branch of economic analysis that describes the way the economy actually works
positive economies
makes prescriptions about the way the economy should work
normative economies
the alternation between economic downturns, known as recessions, and economic upturns, known as expansions
business cycle
periods of economic downturns when output and employment are falling
recessions
periods of economic upturns when output and employment are rising
expansions
very deep and prolonged downturn
depression
the number of people who are currently working for pay in the economy
employment
the number of people who are actively looking for work but aren’t currently employed
unemployment
equal to the sum of employment and unemployment
labor force
percentage of the labor force that is unemployed
unemployment rate
the quantity of goods and services produced
output
economy’s total production of goods and services for a given time period
aggregate output
rising overall price level
inflation
falling overall price level
deflation
the overall price level is changing only slowly if at all
price stability
an increase in the maximum amount of goods and services an economy can produce
economic growth
a simplified representation used to better understand a real-life situation
model
all other relevant factors remain unchanged (ceteris paribus assumption)
the other things equal assumption
you give up something in order to have something else
trade-off
illustrates the trade offs facing an economy that produces only two goods; shows the maximum quantity of one good that can be produced for each possible quantity of the other good produced
production possibilities curve
there is no way to make anyone better off without making at least one person worse off
efficient
produces at a point on its PPC
production efficiency
produces at the point along its PPC that makes consumers as well off as possible
allocative efficiency
market economy; individuals provide goods and services to others and receive goods and serves in return
trade
people can get more of what they want through trade than the could if they tried to be self-sufficient; each person specializes in the task that he or she is good at preforming
gains from trade; specilization
the opportunity cost of producing the good or service is lower for that individual than for other people
comparative advantage
can make more of it with a given amount of time and recourses
absolute advantage
indicate the rate at which one good can be exchanged for another
terms of trade
a measure that can take on more than one value
variable
solid horizontal line that goes through the origin on a graph
x axis
solid vertical line that goes through the origin on a graph`
y axis
the value of one variable directly influences or determines the value of the other variable
casual relationship
determining variable in a casual relationship
independent variable
determined variable in a casual relationship
dependent variable
line on a graph
curve
a curve that shows the relationship between two variables is a straight line
linear relationship
the curve is not a straight line
nonlinear relationship
when an increase in one variable is associated with an increase in the other variable
positive relationship
when an increase in one variable is associated with a decrease in the other variable
negative relationship
indicates the value of the x variable when the value of the y variable is zero
horizontal intercept
indicates the value of the y variable when the value of the x variable is zero
vertical intercept
measure of how steep it is; indicates how sensitive the y is to a change in the x
slope
slope changes
nonlinear curve
the value of that number without a minus sign
absolute value
point along a curve with the largest value of y
maximum point
point along a curve with the smallest value of y
minimum point
has successive dates on the horizontal axis and the values of a variable that occurred on those dates on the vertical axis
time-series graph
each point corresponds to an actual observation of the x and y
scatter diagram
uses bars of various heights or lengths to indicate values of a variable
bar graph
the technical means of producing goods and services
technology
