Unit 2 Vocabulary

Question 1

Shows the interactions between households and businesses in the free market

Answer 1

Circular Flow of Economics

Question 2

Land/Natural Resources, Capital Goods, Labor, and Entrepreneurship

Answer 2

Factors of Production

Question 3

Materials that are NATURALLY MADE and transformed into something else

Answer 3

Land

Question 4

PEOPLE who work to produce a good or service

Answer 4

Labor

Question 5

Physical/Human: Instruments in assisting in the production of things

Answer 5

Capital

Question 6

People who RISK time and money to start their own business and organize the other factors of production

Answer 6

Entrepreneurship

Question 7

Households pay firms for goods and services
Firms supply households with goods and services

Answer 7

Product Market

Question 8

Households supply firms with land, labor, and capital
Firms pay households for land, labor, and capital

Answer 8

Factor/Labor Market

Question 9

Customers’ desire, willingness, and ability to buy a good or service.

Answer 9

Demand

Question 10

Shows the relationship between the price and the quantity demanded.

Answer 10

Demand Curve

Question 11

Quantity demanded and price move in opposite directions.

Answer 11

Law of Demand

Question 12

A product or service that a consumer sees as the same or similar to another product.

Answer 12

Substitute Goods

Question 13

Products that increase in value when the demand for relative products increases.

Answer 13

Complementary Goods

Question 14

How to list possible prices for a product and how many of that product people are willing to buy at those prices.

Answer 14

Demand Schedule

Question 15

The amount of a good or service that producers are willing to sell at all possible market prices.

Answer 15

Supply

Question 16

The graph made by plotting the points of the supply schedule.

Answer 16

Supply Curve

Question 17

A table that shows the quantity supplied at each price.

Answer 17

Supply Schedule

Question 18

“As the price rises, the quantity supplied rises.”
“As the price falls, the quantity supplied falls.”

Answer 18

Law of Supply

Question 19

Point where there is balance between supply and demand.

Answer 19

Equilibrium Price

Question 20

Quantity supplied is less than the amount demanded
Occurs at any price below the equilibrium

Answer 20

Shortage

Question 21

Quantity supplied is more than amount demanded
Occurs at any price above equilibrium

Answer 21

Surplus

Question 22

When barriers prevent firms from entering a market that has a single supplier(has only one seller!)

Answer 22

Monopoly

Question 23

The simplest market structure and sometimes known as “pure competition”

Answer 23

Perfect Competition

Question 24

A market dominated by a few large, profitable firms

Answer 24

Oligopoly

Question 25

Rules that limit who can enter a business and what prices they may charge

Answer 25

Regulation

Question 26

The reducing of economic regulation

Answer 26

Deregulation

Question 27

Between two companies that have a similar product or service and compete against each other

Answer 27

Direct Competition

Question 28

Competition among companies that sell different types of goods but are targeting the same customer group.

Answer 28

Indirect Competition