Economics Flashcards
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Consumers
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The people who buy things they need and want.
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Producers
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The people who make the things that satisfy consumers' needs and wants.
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Goods
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Physical objects that can be purchased.
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Services
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Actions or activities that are performed for a fee.
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Resources
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A resource is anything that people use to make or obtain what they need or want.
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Factors of Production
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Resources that can be used to produce goods and services.
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Natural Resources
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Items provided by nature that can be used to produce goods and provide services.
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Human Resources
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Any human effort exerted during production.
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Capital Resources
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The manufactured materials used to create products.
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Capital Goods
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Buildings, structures, machinery, and tools used in the production process. Ex. Department stores, factories, dams, computers, and hammers.
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Consumer Goods
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Capital goods are the manufactured resources that are used in making finished products. These finished products - the goods and services that people buy - are called consumer goods.
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Technology
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The use of technical knowledge and methods to create new products or make existing products more efficiently.
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Entrepreneurship
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The combination of organizational abilities and risk taking involved in starting a new business or introducing a new product.
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Entrepreneur
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An individual who, rather than working as an employee, runs a small business and assumes all the risk and reward of a given business venture, idea, or good or service offered for sale.
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Scarcity
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The combination of limited economic resources and unlimited wants results in a condition known as scarcity.
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Productivity
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Is the level of output that results from level of input.
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Efficiency
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The use of the smallest amount of resources to produce the greatest amount of output.
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Division of Labor
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Assigning a small number of tasks to each worker.
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Specialization
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Is when we concentrate on a product or task to increase the productive efficiency.
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Trade-Off
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One good sacrifice for another.
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Opportunity Cost
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The value of the next best alternative that is given up to obtain the preferred item.
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Production Possibilities Curve
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Shows all of the possible combinations of two goods or services that can be produced within a stated
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Exchange
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A process where producers and consumers agree to provide one type of item in return for another.
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Barter
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Relies on bargaining and often results in complicated transactions. One set of goods traded for another.
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Money
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An item that is readily accepted by people in return for goods and services.
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Credit
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Allows consumers to use items before completing payment for the merchandise.
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Value
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In order to avoid the problems of barter, goods and services are assigned a value that can be expressed as an amount of money, or price.
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Utility
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Value is also determined by the degree to which a product has utility, or usefulness to a person.
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Self-sufficiency
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It is demonstrated when people and society can fulfill all of their needs without outside assistance.
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Inter-dependence
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A mutual reliance between people or things to satisfy needs and wants.
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Traditional Economy
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s based on a society's values - its customs and traditions. In other words, the answers to the three economic questions are found in the past.
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Traditional Economy
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Is based on a society's values - its customs and traditions. In other words, the answers to the three economic questions are found in the past.
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Command Economy
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Relies on government officials to answer the three basic economic questions. Command economies may also be called planned economies.
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Market Economy
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Individuals answer the three basic economic questions. The government has no say in what, how and for whom goods are produced, and the factors of production are owned by individuals. People can buy, sell, and produce anything they want.
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Market
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A market is the free exchange of goods and services. The market provides the only form of control over what goods and services are bought and sold.
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Self-interest
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An Incentive is something that motivates an individual to perform an action.
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Mixed Economy
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Combines elements of traditional, market and command economic models to answer the three basic economic questions.
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Authoritarian socialism
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Mixed economies that are closest to the pure command model said to practice authoritarian socialism, which is also known as communism.
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Communism
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Mixed economies that are closest to the pure command model said to practice communism, which is also known as authoritarian socialism.
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Capitalism
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Economies that practice closest to the market model. In an economy based on capitalism, individuals own the factors of production and answer the basic economic questions.
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Democratic Socialism
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A type of mixed economy where the government owns some of the factors of production.
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Free Enterprise
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A company or business that has little to no restrictions. Consumers can make their own choices with no government intervention.
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Private Property
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Goods that are owned by individuals and by businesses, rather than by the government.
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Contracts
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A written or spoken agreement, especially one concerning employment, sales, or tenancy, that is intended to be enforceable by law.
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Competition
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The economic rivalry that exists between among businesses selling the same or similar products. Competition is important because it encourages producers to improve existing products and develop new ones in order to attract customers.
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Voluntary Exchange
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When producers and consumers unconditionally purchase and sell products, and they believe that the opportunity costs of such a trade are acceptable to both parties, the transaction is called a voluntary exchange.
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Product Market
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Is where goods and services produced by businesses are sold to households. The households use the income they receive from the sale of resources to purchase the products. The money they spend is returned to the businesses as revenue.
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Resource Market
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A resource market is a market where a business can go and purchase resources to produce goods and services. Resource markets can be distinguished from product markets, where finished goods and services are sold to consumers, and financial markets, where financial assets are traded.
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Income
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The money paid to households by business firms and the government in exchange for the households' resources.
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Full Employment
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The lowest possible level of unemployment in the economy.
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Price Stability
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It is the other element of economic stability, and is achieved when the overall price level of the goods and services available in the economy is relatively constant.
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Standard of Living
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Refers to people's economic well-being. Economists measure a nation's standard of living by how much the average person in that country is able to consume in a given period of time-usually one year.
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Moral Incentives
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Moral incentives motivate people to do things on the basis of right and wrong. People are encouraged to do certain action because morally, it is the right thing to do.
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Economic Incentives
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Economic incentives are what motivates you to behave in a certain way, while preferences are your needs, wants and desires. Economic incentives provide you the motivation to pursue your preferences.
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Social Incentives
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Social incentive would mean your behavior or actions are motivated by your desire to conform to what others (society) do, so you can be accepted by others.
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Coercion
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Improper use (or threat of improper use) of authority, economic power, physical force, or other such advantage, by a party to compel another to submit to the wishes of its wielder. Agreements entered into, or testaments signed, under coercion are considered illegal and invalid.
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Penalty
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A punishment imposed for a violation of law.
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Positive Incentive
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Positive incentives seek to motivate others by promising a reward.
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Negative Incentive
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Negative incentives aim to motivate others by threatening a punishment.
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Cheating
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To break a rule or law usually to gain an advantage at something.
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Stocks
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A type of security that signifies ownership in a corporation and represents a claim on part of the corporation's assets and earnings.
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Bonds
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An instrument of indebtedness of the bond issuer to the holders. It is a debt security, under which the issuer owes the holders a debt and, depending on the terms of the bond, is obliged to pay them interest (the coupon) and/or to repay the principal at a later date, termed the maturity date.
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Mutual Funds
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An investment vehicle that is made up of a pool of funds collected from many investors for the purpose of investing in securities such as stocks, bonds, money market instruments and similar assets. Mutual funds are operated by money managers, who invest the fund's capital and attempt to produce capital gains and income for the fund's investors.
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Stock Market
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The market in which shares of publicly held companies are issued and traded either through exchanges or over-the-counter markets.
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Dow Jones
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The Dow Jones Industrial Average is a price-weighted average of 30 significant stocks traded on the New York Stock Exchange and the Nasdaq.
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Dividend
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A dividend is a distribution of a portion of a company's earnings, decided by the board of directors, to a class of its shareholders. Dividends can be issued as cash payments, as shares of stock, or other property.
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