Unit 3 Key Terms Flashcards
the quantity of a good or service that consumers are both willing and able to buy at various prices
Demand
an economic law stating that as the price of a good or service increases, the quantity demanded decreases, and vice versa
Law of Demand
a product that satisfies the same basic want as another product
Substitute Goods
a product that is used or consumed jointly with another product; tennis rackets and tennis balls are one example
Complementary Goods
the quantity of a good or service that producers are willing and able to offer for sale at various prices
Supply
an economic law stating that as the price of a good or service increases, the quantity supplied increases, and vice versa
Law of Supply
the amount of money a firm receives in the course of doing business
Revenue
a measure of the degree to which the quantity demanded or supplied of a good or service changes in response to a change in price
Elasticity
the point at which the quantity of a product demanded by consumers in a market equals the quantity supplied by producers
Market Equilibrium
the price at which the quantity of a product demanded by consumers equals the quantity supplied by producers
Equilibrium Price
the quantity of a good or service demanded by consumers and supplied by producers when the market is in equilibrium
Equilibrium Quantity
government-imposed limits on the prices that producers may charge in the market
Price Controls
a minimum price set by the government to prevent prices from going too low
Price Floor
a maximum price set by the government to prevent prices from going too high
Price Ceiling
the controlled distribution of a limited supply of a good or service
Rationing
an illegal market in which goods are traded at prices or in quantities higher than those set by law
Black Market
the organization of a market, based mainly on the degree of competition; there are four basic market structures: perfect competition, monopolistic competition, oligopoly, and monopoly
Market Structure
a market structure in which many producers supply an identical product and no single producer can influence its price; in such a market, prices are set by supply and demand
Perfect Competition
a market structure in which a single producer supplies a unique product that has no close substitutes
Monopoly
a market structure in which a few firms dominate the market and produce similar or identical goods
Oligopoly
a market structure in which many producers supply similar but varied products
Monopolistic Competition
a situation in which the market fails to allocate resources efficiently
Market Failure
a cost or benefit that arises from production or consumption of a good or service that falls on someone other than the producer or consumer; a spillover or side effect of production or consumption
Externality
goods and services that are used collectively and that no one can be excluded from using; public goods are not provided by markets
Public Goods
a business whose main purpose is to receive deposits and make loans
Bank
anything owned to which a market value can be assigned
Assets
a card authorizing the user to buy goods and services with funds borrowed from the bank, store, or other business that issued the card
Credit Card
a card authorizing the user to access his or her own funds on deposit in a bank account; a debit card can be used to buy goods and services or to withdraw money directly from an account
Debit Card
setting aside a portion of income for use in the future
Saving
a periodic payment for the use of borrowed funds; interest is paid on a loan
Interest
the amount of money borrowed, or the amount of money still owed on a loan, apart from the interest
Principal
using money with the intention of making a financial gain
Investing
a method of lowering risk by investing in a wide variety of financial assets
Diversification
a business owned and managed by one person
Sole Proprietorship
the legal responsibility to repay debts and to pay for damages resulting from a lawsuit
Liability
a business owned by two or more co-owners who share profits from the business and are legally responsible for the business’s debts
Partnership
a business owned by shareholders who have limited liability for the firm’s debt
Corporation
a corporation that does business in more than one country
Multinational Corporation
an arrangement in which a parent company, or franchiser, distributes its products or services through independently owned outlets
Business Franchise
a business organization that is jointly owned and operated by a group of individuals for their mutual benefit
Cooperative
an organization that functions much like a business but does not operate to make a profit; nonprofit organizations focus on public or private goals, such as the promotion of human rights, environmental preservation, or medical research
Nonprofit Organization
the portion of the population that has paid work or is seeking work; the labor force does not include active members of the military
Labor Force
relocating work and jobs to another country; the opposite of inshoring
Offshoring
the rate of pay that results in neither a surplus nor a shortage of labor; a wage rate that is too high will attract too many workers, whereas a rate that is too low will attract too few
Equilibrium Wage
nonwage compensations offered to workers in addition to pay; examples include health care and vacation benefits
Fringe Benefits
a difference in the wages earned by various groups in society, such as between men and women or between white Americans and black Americans
Wage Gap
policies designed to promote the hiring of individuals from groups that have historically faced job discrimination
Affirmative Action
negotiations between an employer and a group of employees, usually represented by a labor union, to determine the conditions of employment
Collective Bargaining
a law that prohibits employers from making union membership a requirement for getting or keeping a job
Right-to-work Law
