Economics Final Exam Vocabulary Cheat Sheet – Flashcards
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The study of how people seek to satisfy their needs and wants by making choices.
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Economics
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something like air, food, or shelter that is necessary for survival.
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Need
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What we want but is not necessary for survival.
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Want
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Physical objects such as clothes or shoes.
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Goods
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Actions or activities that one person performs for another.
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Services
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A situation in which unlimited wants exceed the limited resources available to fulfill those wants.
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Scarcity
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A situation in which quantity demanded is greater than quantity supplied.
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Shortage
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Land, labor, and capital;the three groups of resources that are used to make all the goods and services.
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Factors of Production
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All natural resources used to produce goods and services.
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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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the skills and knowledge gained by a worker through education and experience.
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Human Capital
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all human-made goods that are used to produce other goods and services; tools and buildings.
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Physical Capital
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Ambitious leader who combines land, labor, and capital to create and market new goods or services.
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Entrepreneurs
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An exchange of one thing in return for another; especially relinquishment of one benefit or advantage for another regarded as more desirable.
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Trade-Off
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Cost of the next best alternative use of money, time, or resources when one choice is made rather than another.
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Opportunity Cost
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using resources in such a way as to maximize the production of all goods or services.
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Efficiency
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Using fewer resources than an economy is capable of using.
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Underutilization
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1. What goods and services should be produced? 2. How should these goods and services be produced? 3. Who consumes these goods and services?
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3 Economic Questions
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An economy in which production is based on customs and traditions and economic roles are typically passed down from one generation to the next.
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Traditional economy
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Economic decisions are made by individuals or the open market.
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Market economy
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An economy in which private enterprise exists in combination with a considerable amount of government regulation and promotion.
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Mixed economy
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economic system in which the central government makes all decisions on the production and consumption of goods and services.
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Centrally planned economy/Command Economy
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A financial gain, esp. the difference between the amount earned and the amount spent in buying, operating, or producing something.
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Profit
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A common demand by two or more organisms upon a limited supply of a resource; for example, food, water, light, space, mates, nesting sites. It may be intraspecific or interspecific.
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Competition
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A phrase coined by Adam Smith to describe the process that turns self-directed gain into social and economic benefits for all
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Invisible hand
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An economic system characterized by private or coperate ownership of capital goods; investments that are determined by private decision rather than by state control; and determined in a free market.
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Free enterprise
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The total value of goods and services produced within the borders of a country during a specific time period, usually one year.
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Gross domestic product
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Someone who would not choose to pay for a certain good or service, but who would get the benefits of it anyway if it were provided as a public good.
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Free rider
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Consumer willingness and ability to buy products.
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Demand
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consumers buy more of a good when its price decreases and less when its price increases.
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Law of demand
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"All other things held constant".
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Ceteris peribus
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a good for which, other things equal, an increase in income leads to an increase in demand.
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Normal good
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a good that consumers demand less of when their incomes increase.
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Inferior good
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The amount of supply (high or low).
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What causes shift in demand?
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two goods for which an increase in the price of one leads to a decrease in the demand for the other.
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Complements
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Goods and services that can be used for the same purpose.
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Substitutes
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A measure of how consumers react to change in price.
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Elasticity of demand
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(Price x Quantity), the number of units sold multiplied by the average price per unit.
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Total revenue
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The amount of goods available.
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Supply
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The principle that suppliers will normally offer more for sale at higher prices and less at lower prices.
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Law of supply
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A government payment that supports a business or market.
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Subsidy
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The amount of demand (high or low).
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What causes shift in supply?
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A state of balance.
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Equilibrium
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at the existing price the quantity demanded exceeds the quantity supplied.
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Excess demand (shortage)
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at the existing price the quantity supplied exceeds the quantity demanded.
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Excess supply (surplus)
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A legal maximum on the price at which a good can be sold.
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Price ceiling
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A legal minimum on the price at which a good can be sold.
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Price floor
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A market structure in which a large number of firms all produce the same product.
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Perfect competition
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something useful that can be used for financial advantage; a product or service that is indistinguishable from the same thing from competing sellers.
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Commodity
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factors that make it difficult and costly for an organization to enter a particular task environment or industry.
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Barriers to entry
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A market in which there are many buyers but only one seller.
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Monopoly
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A reduction in unit costs brought about especially by increased size of production facilities.
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Economies of sale
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(n.) exclusive rights over an invention; copyright; (v.) to arrange or obtain such rights; (adj.) plain, open to view; copyrighted.
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Patent
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The right to sell a good or service within an excusive market.
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Franchise
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a market structure in which many companies sell products that are similar but not identical.
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Monopolistic competition
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(economics) a market in which control over the supply of a commodity is in the hands of a small number of producers and each one can influence prices and affect competitors.
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Oligopoly
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collaboration; complicity; conspiracy.
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Collusion
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an agreement among firms to charge one price for the same good.
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Price fixing
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a formal organization of producers that agree to coordinate prices and production.
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Cartel
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businesses owned and operated by one individual; the most common form of business organization in the United States.
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Sole proprietorships
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(n.) a debt; something disadvantageous.
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Liability
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indirect payments for work.
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Fringe benefits
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A business in which two or more persons combine their assets and skills.
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Partnership
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partnership in which partners share equally in both responsibility and liability.
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General partnership
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partnership in which only one partner is required to be a general partner.
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Limited partnership
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a type of partnership in which all partners are limited partners.
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Limited liability partnership
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Economic resources (things of value) owned by a firm.
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Assets
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businesses that are owned by many investors who buy shares of stock.
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Corporations
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A certificate of ownership in a corporation.
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Stock
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a type of corporation that issues stock to only a few people, who are often family members.
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Closely held Corporations
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A corporation that may have thousands of stockholders and whose stock is traded on a national securities market.
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Publicly held Corporation
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A financial security that represents a promise to repay a fixed amount of funds.
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Bond
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A payment from profits by a company's Board of Director's to shareholders. (Dividends are issued on a regular basis and can be either increased or decreased).
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Dividend
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the combination of two or more firms competing in the same market with the same good or service.
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Horizontal merger
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the combination of two or more firms involved in different stages of producing the same good or service.
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Vertical merger
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corporation made up of several different companies in diversified fields; mass of various material gathered together; rock consisting of small stones held together by clay; V.
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Conglomerate
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a semi-independent business that pays fees to a parent company in return for the exclusive right to sell a certain product or service in a given area.
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Business franchise
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The share of earnings given by a franchisee as payment to the franchiser.
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Royalties
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A metaphor alluding to the invisible barriers that prevent minorities and women from being promoted to top corporate positions.
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Glass ceiling
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An organization formed by workers to strive for better wages and working conditions.
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Labor unions
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the practice of negotiating labor contracts that keep unnecessary workers on a company's payroll
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Featherbedding
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Process by which a union representing a group of workers negotiates with management for a contract
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Collective bargaining
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An intentional, self-produced state of consciousness induced by relaxing and systematically shifting attention away from day-to-day concerns.
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Meditation
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(n.) the process or act of resolving a dispute (The employee sought official arbitration when he could not resolve a disagreement with his supervisor.).
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Arbitration
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Capital.
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Money
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anything that is used to determine value during the exchange of goods and services.
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Medium of exchange
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Exchange goods without involving money.
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Barter
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the yardstick people use to post prices and record debts.
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Unit of account
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an item that people can use to transfer purchasing power from the present to the future.
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Store of value
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Durability, Portability, Divisibility, Uniformity, Limited supply, and acceptability.
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Six characteristics of money
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objects that have value in themselves and that are also used as money.
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Commodity money
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objects that have value because the holder can exchange them for something else of value.
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Representative money
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money that has value because the government has ordered that it is an acceptable means to pay debts.
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Fiat money
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failure to pay back a loan.
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Default
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a specific type of loan that is used to buy real estate.
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Mortgage
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A sum paid or charged for the use of money or for borrowing money.
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Interest
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The amount of money borrowed.
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Principal
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spending on capital equipment, inventories, and structures, including household purchases of new housing.
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Investment
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Spreading out investments to reduce risk.
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Diversification
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A collection of financial assets.
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Portfolio
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the group of institutions in the economy that help to match one person's saving with another person's investment.
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Financial system
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claim on the property or income of a borrower.
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Financial asset
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institution that helps channel funds from savers to borrowers.
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Financial intermediary
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A pool of money used by a company to purchase a variety of stocks, bonds or money market instruments. Provides diversification and professional management for investors.
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Mutual funds
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A general term used to describe all transactions involving the buying and selling of stock shares issued by a company.
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Stock market
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An involvement in risky business transactions in an effort to make a quick or large profit.
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Speculation
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An arrangement to receive cash, goods, or services now and pay for them in the future.
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Credit
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A contract whereby one party (insurer) agrees to indemnify or guarantee another party (insured) against a loss by a specified future contingency or peril in return for payment of a premium.
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Insurance
