AGS Publishing Economics Chapters 1-7 – Flashcards
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Resource
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Anything that people use to make things or to do work
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Labor
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Work
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Capital
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Things of worth: machines, buildings, tools, and money
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Natural Resource
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A raw material found on Earth, such as water, minerals, land, and forests
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Economics
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The study of how people and countries make decisions about how to use their scarce resources in the most efficient way.
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Choice
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The act of deciding on and selecting what is wanted most
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Need
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Something that is necessary to remain alive
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Want
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A thing that is not needed to survive but that makes life better
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Good
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An item people buy, such as a car, television, or bed
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Manufacturer
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To turn materials into products people use every day
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Service
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Work done for other people for a fee
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Scarcity
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A problem in which wants are greater than what is available
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Trade-off
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The act of giving up one thing for another
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Opportunity
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Each possible use of a resource
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Opportunity Cost
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The cost of choosing one choice over another
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Production Possibilities
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All combination of goods and services that can be produced from a fixed amount of resources in a given period of time
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Factors of Production
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Resources that are used to make goods and services
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Entrepreneurship
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When someone starts a new businesses or improves an old one
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Manager
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The person who runs a business or some part of it
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Productivity
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The amount of goods and services workers can produce in a given time.
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Division of Labor
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Dividing up workers so that each worker completes one job, which is one part of a larger job.
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Specialization
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When a person, country, or region works on making one part of an item
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Assembly Line
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A system in which a product moves from worker to worker so it can be put together faster.
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Technology
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The use of science to create new products or make old ones better
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Database
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A large collection of information stored on a computer
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Tradition
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Something that is passed down from one group to another
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Traditional Economy
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An economy that does things as they were done in the past; custom and tradition determine answers to the three economic questions
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Rural
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Away from the city
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Command Economy
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An economy in which government leaders give the answers to the three economic questions: What should be produced, How should it be produced, and Who should get the goods
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Heavy Industry
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Large-scale production of basic items
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Agriculture
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Farming
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Consumer Goods
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Everyday items that people purchase
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Socialism
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The belief that governments rather than individuals should own a country's major industries
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Utilities
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Items such as electricity, water, or gas
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Welfare
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Aid (money or goods) for those in need
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Democracy
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A government in which citizens take part
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Representative
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An elected leader who makes and carries out laws
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Democratic Socialism
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A government in which the people have a say in government but in which the government owns the major industries
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Communism
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A government in which the government owns ALL property
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Dictatorship
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A government in which the people have no rights; one person or a small group of people rule the country by force and make all laws
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Profit
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Money left over after all the costs of production have been paid
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Competition
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A contest between business or individuals to sell a product or service
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Invisible Hand
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Adam Smith's idea that competition acts like an invisible hand; it pushes people to do what is best for themselves
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Market
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A place where people come together to buy and sell
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Capitalism
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A system in which individuals and private businesses own and control production; also called a market economy
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Incentive
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Something that makes a person take an action
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Mixed Economy
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An economy in which there is a blend of economic systems; individuals and the government share in the decision-making process.
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Declaration of Independence
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A document written by American colonists explaining why the American colonies no longer be ruled by Great Britain
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Natural Right
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A right given by God
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Constitution
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A plan of government
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Legislature
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A lawmaking branch of government
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Congress
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The lawmaking branch of the American government
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Amendment
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A formal change to the Constitution
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Bill of Rights
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The first ten amendments to the American Constitution
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Search Warrant
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A document issued by a judge that says exactly who and what will be searched
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Citizenship
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The act of being a member of a country
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Due Process
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The act of following clear rules in court and treating everyone fairly
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Free Enterprise
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A name for the American style of economy; same as capitalist or market economy
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Consumer
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One who buys and uses products
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Exchange
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The act of giving another person something and getting something back
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Voluntary Exchange
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An exchange someone makes on purpose
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Discrimination
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Unfair treatment because of a person's race, sex, religion, age, or physical condition
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Total Revenue
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All money
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Total Cost
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All costs involved in making something to sell
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Revenue
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All the money taken in by a business
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Fixed Cost
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A cost that stays the same no matter how much business is done
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Overhead
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The costs of doing business
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Variable Cost
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A cost that changes
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Lay Off
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To release a worker because there is no longer money to pay the worker
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Loss
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The event in which money is lost because the total cost of doing business is greater than the total revenue.
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Demand
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The amount of a good or service that consumers are willing and able to buy at a given price
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Income
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The amount of money a person makes
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Demand Curve
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A way to explain the law of demand in a picture; the picture shows prices and units demanded at each price
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Elastic Demand
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The state in which a price increase causes a large change in demand
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Inelastic Demand
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The state in which a price increase has little effect on demand
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Luxury
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A thing that gives us pleasure but that we really do not need
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Necessity
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A thing we need to live
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Substitute
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A product that can be used in place of another product
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Bottom line
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How much profit a business makes
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Utility
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The usefulness or satisfaction a consumer gets from a product
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Diminishing Marginal Utility
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A decrease in need because enough units are being produced to meet demand
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Supply
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The ability and willingness of sellers to make things available for sale
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Law of Supply
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The belief that as the price of a good rises, the quantity supplied will rise
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Supply Schedule
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A way to show the law of supply using a chart; it shows the quantity of a good offered at each possible market price
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Supply Curve
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A graph showing that suppliers are more willing to sell at higher prices than lower prices.
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Elasticity of Supply
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The measure of how changes in price affect the quantity of supply
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Inelastic Supply
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When a change in price has very little effect on the quantity supplied
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Tax
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Money that people and business pay to help pay the cost of government
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Subsidy
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A government grant
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Price Support
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A government-guaranteed minimum price farmers receive for their products
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Law of Variable Proportions
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The belief that in the short run, changing one of the inputs changes the output
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Production Schedule
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A table that shows how the number of workers affect productivity and marginal product
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Marginal Product
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The extra amount produced by adding one resource to production
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Increasing Returns
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When adding resources increases production
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Diminishing Returns
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When adding resources is not always a good thing; it can cause production to slow down slightly
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Negative Returns
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When adding resources causes production to be less than before
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Marginal Cost
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The additional cost of producing one more unit
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Price System
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Communication between buyers and sellers through the use of prices
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Relative Worth
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The value that most people would place on a good
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Market Failure
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Market problems caused when buyers and sellers are not well informed, resources are not free to shift to where they can be better used, or prices are not set reasonably
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Externalities
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Side effects of an economic situation; they can be either helpful or harmful
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Positive Externality
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A helpful side effect of an economic situation
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Negative Externality
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A harmful side effect of an economic situation
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Public Goods
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Products or services available to everyone
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Rationing
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A system in which the government provides a fixed amount of limited supplies to each person
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Crisis
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An event that threatens people's well-being
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Ration Coupon
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A piece of paper that can be exchanged for goods during rationing
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Black Market
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An illegal market in which goods and services are sold above their legal price
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Equilibrium Price
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The price that both buyers and sellers will accept
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Equilibrium Point
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The pint at which the quantity demanded equals the quantity supplied.
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Surplus
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Extra goods caused by the difference between what a seller is willing to supply and what buyers are willing to pay at that price
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Shortage
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When the number of goods needed is greater than the number of producers are willing to sell
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Price Ceiling
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A maximum price for some goods and services
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Price Floor
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A minimum price for some goods and services
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Minimum Wage
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The lowest wage an employer can pay an employee
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Pure Competition
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Competition in which there are many buyers and sellers, there is a standardized product, the buyers and sellers are well informed, there is easy entry into and out of the market, and there is no control over prices
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Standardized Product
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A product group in which competing products are nearly the same
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Monopoly
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A market in which there is no competition; one company controls the market
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Pure Monopoly
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A monopoly in which there is only one seller, there are no substitutes for a product or service, getting into and out of the market is difficult, and there is almost complete control over prices.
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Natural Monopoly
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A monopoly that is allowed to exist because competition is not needed
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Patent
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Right of sole ownership of an invention given to the inventor of an item
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Copyright
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The sole right given to writers and artist to sell or make copies of their works
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Oligopoly
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A type of market where there are only a few sellers, there is a nearly standardized product, and entry into market is difficult
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Price War
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A series of price cuts to price below the competition
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Collusion
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A secret agreement between competing firms to cooperate with each other
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Price-Fixing
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An agreement to sell products for the same or similar prices
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Monopolistic Competition
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A type of market where that are many buyers and sellers, there is some product variation, and entry into the market is easy
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Differentiate
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A way a company attracts buyers by showing differences between their product and their competitors'
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Customer Services
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A way a company attracts buyers by providing services to those who have bought products
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Warranty
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A promise to fix something if it does not work
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Brand Name
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The name of a product used to identify the product quickly, often through use of a logo
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Logo
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A symbol that everyone knows, which is used to identify a product
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Trust
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When a few giant companies control important industries.
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Reform
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Change to make things work better
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Majority
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The quality or state of being greater
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Price Discrimination
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The practice of selling different buyers the same product for different prices.
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Merger
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When one business buys another
