Economics test chapter 1,2 & 3 Flashcards
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Need
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something like air, food, shelter that is necessary for survival
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want
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an item that we desire but that is not essential to survival
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economics
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the study of how people seek to satisfy their needs and wants by making choices
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goods
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physical objects such as clothes or shoes
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services
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Actions or activities that one person performs for another
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scarcity
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limited quantities of resorces to meed unlimited wants
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shortage
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a situation in which good or services in unavaliable
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Factors of production
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land labor and capital
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Land
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Natural resources that are used to make all good and services
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labor
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the effort that people devote to a task for which they are paid
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capital
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any human made resource that is used to create other goods and services
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Physical capital
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all human goods that are used to produce other goods and services tools and buildings
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human capital
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the skills and knowledge gained by a worker through education and experience
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entrepreneur
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ambitious leader who combines land labor and capital to create and market new goods and services
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Guns or butter
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government choices between making military goods and consumer goods
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Trade off
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an alternative that we sacrifice when we make a decision
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opportunity cost
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the most desirable alternative given up as the result of a decision.
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think at the margin
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deciding whether to do or use one additional unit of some resource
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production possibility curve
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a graph that shows alternative ways to use an economy's resources.
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production possibilities frontier
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a graph that shows maximum possiablites output.
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efficiency
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using resources in such a way as to maximize the production of good services
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cost
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to an economist the alternative that is given up because of a decision
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law of increasing cost
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law that states that as we shift factors of production from making one good or service to another the cost of producing the second item increasing
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economic system
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the method used by a society to produce and distribute good and services
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factor payments
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the income people receiving for supplying factors of production
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patriotism
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the love of ones country
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safety net
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government programs that protect people experiencing un favorable economic conditions
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standard living
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level of economic prosperity
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traditional economy
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economic system that relies on habit custom or rural to decide questions of productions
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market economy
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economic system in which decisions on productions and consumption
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centrally planned economy
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economic system in which central government makes decision
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command economies
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central authority is in command
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mixed economy
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market based economy system with limited government involvement
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Market
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an arrangement that allows buyers and sellers to exchange things
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specialization
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the concentration of the productive efforts of individuals and firms on a limited number of activities
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firm
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and organization that uses resources to produce a product which it then sells
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factor market
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market which firms purchase the factors of production from household
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profit
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the financial gain made in transaction
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product market
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the market in which households purchase the goods and services that firms produce
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incentive
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an expectation that encourages people to behave in a certain way
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consumer sovereignty
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the power of consumers to decide what gets produces.
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socialism
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a social and political philosophy based on the belief that democratic means should use to evenly distribute wealth throughout a society
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communism
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political system characterized by a planned economy with all economic and political power resting in the hands of the central government
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collectives
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large farm leased from the state to groups of peasant farmers
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heavy industry
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industry that requires a large capital investment and that produces items used in other industries
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laissez faire
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doctrine that states that government generally should not intervene in that marketplace
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free enterprise
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economic system characterized by private or corporate ownership of capital goods
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continuum
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a range with no clear divisions
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transition
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period of change in which an economy moves away from a centrally planned economy toward a market based system
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privatize
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to sell state-run firms to individuals
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profit motive
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the force that encourages people and organizations to improve their material well-being
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open opportunity
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the concept that everyone can compete in the market place
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legal equality
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the giving everyone the same legal rights
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private property rights
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the concept that people have the right to control their possesses they wish
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free contract
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the concept that people may decide what agreements they want to enter into
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volunteer exchange
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the concept that people may decide what and when they want to buy and sell
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competition
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rivaly among sellers to attract customers while lowering costs
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intrest groups
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a private organization that tries to persuade public officials to act or vote according to group members interests
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public disclosure law
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laws requiring to provide full information about their products
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public intrest
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concerns of the public
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macroeconomics
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the study of the behavior and decision making of entire economies
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microeconomics
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study of behavior and decision making of small units. such as individuals
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gross domestic product
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the total value of all final goods and services products in a partially economy
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business cycle
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a period of macroeconomics expansion followed by a period on concentration
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work ethic
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a commitment to the value and work of purposeful activity
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public goods
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a shared goods or services for which it would take be inficent or impractical to make consumers pay
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public sector
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the part of the economy that involves the transactions of the government
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private sector
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the part of the economy that involves the transactions of individuals and businesses
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free rider
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someone who will not choose to pay for a certain amount good and services but would get benefits
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externality
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an economic side effect of a good services that generates benefits or cost to someone other that the person deciding
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poverty threshold
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an income level below that which is needed to support families or households
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welfare
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government aid poor
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cash transfers
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direct payments of money to eligible poor people
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in-kind benefits
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goods and services provided for free or at greatly reduced prices
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different types of economy
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1. Capitalistic/"Freemarket" 2. Socialistic 3. Mixed Economy
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types of capital
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1) Subordinate Notes and Debentures 2) Preferred Stock 3) Common Equity Capital/Total Assets
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safety net programs
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to protect the poor, unemployed, and children
