Economics cp- unit 1 – Flashcards
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The study of how people make choices about ways to use limited resources to fulfill their wants
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Economics
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Basic economic problems that results from a combination of limited resources and unlimited wants
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Scarcity
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Resources of land, labor, capital, and entrepreneurship used to produce good and services
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Factors of productions
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Natural resources surface land and water
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Land
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Human effort directed toward producing goods and services
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Labor
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OBJECTS that satisfy people's wants or needs
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Goods
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ACTIONS that can satisfy people's wants or needs
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Services
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Previously manufactured goods used to make other goods and services
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Capital
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The amount of output (goods&services) that result from levels of input (land, labor, capitol, and entrepreneruship)
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Productivity
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When individuals take risks to develop new products and start a new business to make profit
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Entrepreneurship
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The use of science to develop nee products and new methods for producing, distributing goods and services
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Technology
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Exchanging one thing for another
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Trade-off
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The value of the next best alternative that had to be given up yo do the action that was chosen
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Opportunity cost
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Models used by economists to show the max combinations or goods and services that can be produced from a fixed amount of resources in a time period
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Production possibility curve
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Deals with behavior and decision making by small units such as individuals and firms
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Microeconomics
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Deals with the economy as a whole and decision making by large units such as governments
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Macroeconomics
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All the activity in a nation that together effects the production, distribution, and use of goods and services
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Economy
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Theories that economists use in their work
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Economic model
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An educated guess of prediction
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Hypothesis
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The way a nation determines how yo use its resources to satisfy peoples needs and wants
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Economic system
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Economic decisions are based on customs and beliefs that have been handed down from generations
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Traditional economy
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The government controls the factors of production and makes all decisions about their use
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Command economy
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Economic decisions are made by and individual
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Market economy
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Voluntary exchange for goods
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Market
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Illustration of how the market works
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Circular flow of economic activity
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Combined basic elements of a pure market economy and a command economy
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Mixed economy
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Economic system in which private individuals own the factors of production
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Capitalism
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Economic system in which the government minimizes its interference with the economy
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Laissez-faire
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Capitalism, a free market system
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Free-enterprise system
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Amount left after all the costs of production have been paid, including rents, interest, and taxes
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Profit
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Desire to make a profit
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Profit incentive
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Property is owned by individuals or groups
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Private property
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Rivalry among producers or similar producers to win more business by offering lower prices or better quality
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Competition
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Wise use of available resources to obtain greatest benefits possible
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Economic efficiency
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The attempt to balance an economic policy so that everyone benefits fairly
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Economic equity
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The material well-being of an individual, group, or nation
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Standard living
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Producing increasing amounts of goods and services over the long term
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Economic growth
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Any person or group that buys or uses goods and services
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Consumer
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The money income a person has left after all taxes have been paid
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Disposable income
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Any leftover income that can be saved of spent
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Discretionary income
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Making consumer decisions base on opportunity cost
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Rational choice
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Advertising that attempts to persuade the consumer that a product is different from and better than any other
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Competitive advertising
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Aids consumers by providing useful information about a product
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Informative advertising
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The bait is an unrealistically low priced item them the consumer points out the negative them the sales person will show an expensive item
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Bait and switch
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Getting information types and prices of products available from different stores or companies
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Comparison shopping
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Promise made by a manufacturer or seller to repair or replace a product
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Warranty
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A word, picture, or logo on a product that helps customers distinguish it from similar products
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Brand name
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No brand name at all, and is difficult to know who made the product
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Generic brand
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A movement that started in the 1960s to advocate buyers about the purchase they make and to demand better and safer products
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Consumerism
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Respecting rights of producers and sellers
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Ethical behavior
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Receiving of funds either directly or indirectly to buy goods and services today with the promise to pay for them in future
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Credit
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Amount originally borrowed
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Principal
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The amount the borrowed must pay tor the use of someone else's funds
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Interest
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Consumers repay this type of loan with equal payments or installments over a period of time
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Installment debt
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Manufacutured items that last longer than three years on an installment plan
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Durable goods
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An installment debt owed on real property houses, buildings, or land
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Mortgage
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Control the largest amount of funds and offer the widest range or service
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Commercial bank
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Accepts deposits and lends funds
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Savings and loan association (S&L)
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Lend funds for home mortgages, allowed with personal and auto loans
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Savings bank
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Owned and operated by its members to provide savings account and low interest loans only to its members
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Credit union
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Takes over contracts for installment debts from stores and adds a fee for collecting the debt
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Finance company
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Allows a customer to buy goods or services from a particular company and pays for them later
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Charge account
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Allows a person to make purchases without paying cash
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Credit card
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The cost of credit expressed in dollars and cents
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Finance charge
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The cost of credit expressed as a yearly percentage
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Annual percentage rate (APR)
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Private buisness to do a credit check
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Credit bureau
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Investigation to reveal your income, any current debts, details about your personal life and how well you have repaid debts in the past
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Credit check
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Rating of the risk-good, average, or poor involved in lending funds to a specific person of business
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Credit rating
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The size of your capital or person wealth
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Collateral
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A loan that is backed up with collateral
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Secured loan
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Sometimes financial institutions will lend funds on a person's reputation and a promise to repay
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Unsecured loan
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A law restricting the amount of interest that can be charged for credit
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Usury law
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The state of legally having been declared unable to pay of debts and with available income
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Bankruptcy
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Land, labor, capital and entrepreneurship
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What are four factors of production?
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Opportunity cost
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What do economists call the next best alternative that was given up for the one chosen?
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Economic models
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What are theories in economics called?
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Individuals
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Who owns the factors of production in a market economy?
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The government places legal restrictions on freedom of enterprise
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What is the role of government in our free-enterprise society?
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Freedom of enterprise system Freedom of choice Profit incentive Competition Private party Limited role of government
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What are six important characteristics of a pure economic market system?
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Freedom, efficiency, and equity
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What are the three goals of the free-enterprise system?
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Freedom Efficiency Equity Security Stability Growth
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What are the goals of the U.S. Economy?
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Luxury items or entertainment
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What kind of products are purchased with discretionary income?
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Right to safety Right to be informed Right yo choose Right to be heard Right to redress
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What private and federal help can you receive as a consumer?
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Principal and interest
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What do you have to pay when you borrow?
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Regular charge account Revolving charge account Installment charge account
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What three kinds of charge accounts are available from stores?
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Commercial banks Saving&Loan ass. Savings banks Credit union Finance companies
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What are six types of basic institutions in our economy?
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The interest rates charged on unsecured loans is usually much higher than the rate for secured loans
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What is the difference between secured and unsecured loan?
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Those who can provide credit can not deny you because of race, age, origin, gender, or martial status or religion
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What does the equal credit opportunity act of 1974 prohibit?
