question

something necessary for survival

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Need

question

an item we desire, but do not need to survive

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Want

question

the study of how people seek to satisfy needs and wants by making choices

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Economics

question

physical objects provided to consumers

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Goods

question

actions that one performs for a consumer

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Services

question

implies limited quantities of resources to meet unlimited wants

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Scarcity

question

when producers cannot offer goods or services at current prices

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Shortage

question

land, labor, and capital

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Factors of Production

question

all natural resources

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Land

question

all of the effort which people devote to a task for which they are paid

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Labor

question

human-made resources used in production

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Capital

question

human-made objects used in the production of others

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Physical Capital

question

knowledge and skills a worker gains through education and experience

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Human Capital

question

leaders who combine factors of production to create new goods and services

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Entrepreneurs

question

alternatives we give up when we choose one course of action over another

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Trade-off / Cost

question

a phrase economists use to express the idea that a nation that produces more military goods cannot produce as many consumer goods, and vice versa

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"Guns or Butter"

question

the most desireable alternative given up as the result of a decision

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Opportunity Cost

question

deciding how much more or less to do

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Thinking At the Margin

question

a graph that shows alternative ways to use an economy's resources

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Production Possibilities Curve

question

the line that shows combinations of the production of different goods on a production possibilities curve

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Production Possibilities Frontier

question

using resources to maximize production

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Efficiency

question

using fewer resources than the economy is capable of using

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Underutilization

question

alternative we give up when making a decision

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Cost / Trade-off

question

As production switches from one item to another, more resources are necessary to increase the production of the second item, and the opportunity cost increases.

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Law of Increasing Costs

question

method used by a society to produce and distribute goods and services

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Economic System

question

the income people receive for supplying factors of production - land, labor, capital, or entrepreneurship

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Factor Payments

question

the love of one's country that inspires them to serve it

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Patriotism

question

set of government programs that protect people experiencing unfavorable economic conditions

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Safety Net

question

level of economic prosperity

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Standard of Living

question

* relies on habit, custom, and ritual to decide what to produce, how to produce it, and to whom to distribute it * revolves around the family * usualy communities that tend to stay relatively small and close, working to support entire groups * few mechanisms in place to deal with environmental disaster * resistant to change

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Traditional Economy

question

an economic system in which economic decisions are made by individuals and are based on exchange (trade)

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* Market Economy * Free Markets * Capitalism

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an economic system in which the central government decides how to answer economic questions

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* Centrally Planned Economy * Command Economy

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market-based economic systems in which government plays a limited role

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Mixed Economy

question

an arrangement that allows buyers and sellers to exchange things

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Market

question

the concentration of the productive efforts of individuals and firms on a limited number of activities

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Specialization

question

person or group of people living in the same residence

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Household

question

business; organization that uses resources to produce a product, which it then sells

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Firm

question

firms purchase factors of production from households

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Factor Market

question

the financial gain made in a transaction

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Profit

question

goods and services are purchased from firms by households

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Product Market

question

the desire for personal gain which serves as an incentive

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Self-interest

question

the hope of reward or the fear of punishment that encourages a person to behave in a certain way

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Incentive

question

* struggle among producers for the dollars of consumers * rivalry among sellers to attract customers while lowering costs

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Competition

question

consumers decide what gets produced by providing firms with incentives to meet their demands

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Consumer Sovereignty

question

doctrine that the government generally should not intervene in the marketplace

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Laissez Faire

question

the property that is owned by individuals or companies, not by the government or the people as a whole

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Private Property

question

an economic system characterized by private or corporate ownership of capital goods

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Free Enterprise

question

a range with no clear divisions

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Continuum

question

a period of change in which an economy moves away from central planning toward a market-based system

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Transition

question

when state firms are sold to individuals

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Privatized

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force that encourages people and organizations to improve their material well-being

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Profit Motive

question

Competition causes more production and moderates firms' quests for higher prices. Thus, consumers get the products they want at prices that closely reflect the cost of producing them. All of this happens without central planning. Coined by Adam Smith.

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"Invisible Hand"

question

the concept that everyone can compete in the marketplace

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Open Opportunity

question

the same legal rights are given to everyone, and that allows everyone to compete in the economic marketplace

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Legal Equality

question

the concept that people have the right and priviledge to control their possessions as they wish

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Private Property Rights

question

this right allows people to decide what agreements they want to enter into

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Free Contract

question

this right allows people to decide what and when they want to buy and sell, rather than forcing them to buy or sell particular items at specific prices and times

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Voluntary Exchange

question

a private organization that tries to persuade public officials to act or vote according to the interests of the group's members

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Interest Group

question

laws requiring companies to provide their consumers important information about their products

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Public Disclosure Laws

question

concerns of the public as a whole

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Public Interest

question

study of the behavior and decision making of entire economies; examines major trends for the economy as a whole

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Macroeconomics

question

study of the economic behavior and decision making of small units, such as individuals, families, households, and businesses

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Microeconomics

question

total value of all final goods and services proudced in an economy

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Gross Domestic Product (GDP)

question

* period of macroeconomic expansion followed by a period of contraction, or decline * major fluctuations over any period of time

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Business Cycle

question

commitment to the value of work and purposeful activity

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Work Ethic

question

process used to produce a good or service

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Technology

question

shared good or service for which it would be impractical to make consumers pay individually and to exclude nonpayers ex: dams, roads, bridges

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Public Good

question

the part of the economy that involves the transactions of the government

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Public Sector

question

the part of the economy that involves transactions of individuals and businesses

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Private Sector

question

someone who would not choose to pay for a certain good or service, but would get the benefits of it anyway if it were provided as a public good

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Free Rider

question

a situation in which the market, on its own, does not distribute resources efficiently

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Market Failure

question

an economic side effect of a good or service that generates benefits or costs to someone other than the person deciding how much to produce or consume

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Externality

question

cause the benefit of a good to be gained by someone who did not purchase it ex. a neighbor plants a garden, and you can enjoy the better view and higher property value even though you did not contribute to the garden ex. a tourist can use a public road without contributing funding for its construction

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Positive Externality

question

cause part of the cost of producing a good or service to be paid for by someone other than the producer ex. a community spending money to clean up pollution caused by a local factory

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Negative Externality

question

an income level below that which is needed to support families or households

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Poverty Threshold

question

government aid to the poor

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Welfare

question

direct payments of money to poor, disabled, and retired citizens ex: Social Security, Workers' Compensation, Unemployment Insurance

answer

Cash Transfers

question

goods and services provided for free or at greatly reduced prices ex: food giveaways, food stamps, subsidized housing

answer

In-Kind Benefits

Economics Vocabulary Unit 1 – Flashcards

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