Unit 2 Vocabulary Flashcards
Shows the interactions between households and businesses in the free market
Circular Flow of Economics
Land/Natural Resources, Capital Goods, Labor, and Entrepreneurship
Factors of Production
Materials that are NATURALLY MADE and transformed into something else
Land
PEOPLE who work to produce a good or service
Labor
Physical/Human: Instruments in assisting in the production of things
Capital
People who RISK time and money to start their own business and organize the other factors of production
Entrepreneurship
Households pay firms for goods and services
Firms supply households with goods and services
Product Market
Households supply firms with land, labor, and capital
Firms pay households for land, labor, and capital
Factor/Labor Market
Customers’ desire, willingness, and ability to buy a good or service.
Demand
Shows the relationship between the price and the quantity demanded.
Demand Curve
Quantity demanded and price move in opposite directions.
Law of Demand
A product or service that a consumer sees as the same or similar to another product.
Substitute Goods
Products that increase in value when the demand for relative products increases.
Complementary Goods
How to list possible prices for a product and how many of that product people are willing to buy at those prices.
Demand Schedule
The amount of a good or service that producers are willing to sell at all possible market prices.
Supply
The graph made by plotting the points of the supply schedule.
Supply Curve
A table that shows the quantity supplied at each price.
Supply Schedule
“As the price rises, the quantity supplied rises.”
“As the price falls, the quantity supplied falls.”
Law of Supply
Point where there is balance between supply and demand.
Equilibrium Price
Quantity supplied is less than the amount demanded
Occurs at any price below the equilibrium
Shortage
Quantity supplied is more than amount demanded
Occurs at any price above equilibrium
Surplus
When barriers prevent firms from entering a market that has a single supplier(has only one seller!)
Monopoly
The simplest market structure and sometimes known as “pure competition”
Perfect Competition
A market dominated by a few large, profitable firms
Oligopoly
Rules that limit who can enter a business and what prices they may charge
Regulation
The reducing of economic regulation
Deregulation
Between two companies that have a similar product or service and compete against each other
Direct Competition
Competition among companies that sell different types of goods but are targeting the same customer group.
Indirect Competition
