BUS 101 – Ch.2
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Economics
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The study of how society chooses to employ resources to produce goods and services and distribute them for consumption among various competing groups and individuals.
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Macroeconomics
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The part of economics study that looks at the operation of a nation's economy as a whole.
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Microeconomics
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The part of economics study that looks at the behavior of people and organizations in particular markets.
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Demand
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The quantity of products that people are willing to buy at difference prices at a specific time.
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Supply
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The quantity of products that manufacturers or owners are willing to sell at different prices at a specific time.
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Equilibrium Point
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The point at which the quantity demanded equals the quantity supplied.*
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Surplus
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A situation in which quantity supplied is greater than quantity demanded.*
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Shortage
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Where quantity demanded is greater than quantity supplied.*
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Capitalism
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An economic system in which all or most of the factors of production and distribution are privately owned and operated for profit.
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Oligopoly
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A degree of competition in which just a few sellers dominate the market.
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Monopolistic Competition
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The degree of competition in which a large number of sellers produce very similar products that buyers nevertheless perceive as different.
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Monopoly
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A degree of competition in which only one sell controls the total supply of a product or service, and sets the price.
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The Sherman Anti-trust Act (A-11)
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A 1890 law that banned the formation of trusts and monopolies in the United States.*
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Perfect Competition
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The degree of competition in which there are many sellers in a market and none is large enough to dictate the price of a product.
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Planned Economy (Communism)
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An economic and political system in which the government makes almost all economic decisions and owns almost all the major factors of production.
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Socialism
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An economic system based on the premise that some, if not most, basic businesses should be owned by the government so that profits can be more evenly distributed among the people.
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Mixed Economy
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Economic systems in which some allocation of resources is made by the market and some by the government.
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Business Cycle
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The periodic rises and falls that occur in economies over time.
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Gross Domestic Product (GDP)
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The total value of final goods and services produced in a country in a given year.
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Consumer Price Index (CPI)
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Monthly statistics that measure the pace of inflation and deflation.
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Inflation
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A general rise in the prices of goods and services over time.
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Producer Price Index (PPI)
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An index that measure prices at the wholesale level.
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Unemployment
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The number of civilians at least 16 years old who are unemployed and tried to find a job within the prior four weeks.
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Frictional Unemployment
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Refers to the people who have quit work because they didn't like the job, the boss, or the working conditions and who haven't yet found a new job. It also refers to those people who are entering the labor force for the first time or are returning to the labor force after significant time away. There will always be some frictional unemployment because it takes some time to find a first job or a new job.
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Structural Unemployment
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Refers to unemployment caused by the restructuring of firms or by a mismatch between the skills (or location) of job seekers and the requirements of available jobs. (e.g., coal miners in an area where mines have been closed)
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Cyclical Unemployment
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Occurs because of a recession or a similar downturn in the business cycle (the ups and downs of business growth and decline over time). This type of unemployment is the most serious.
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Seasonal Unemployment
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Occurs where demand for labor varies over the year, as with the harvesting of crops.
