Chapter 1 Terms
Economics |
The study of how a society chooses to use scarce resources to satisfy unlimited wants and needs. |
Microeconomics |
The study of a single factor of an economy - such as individuals, households, businesses, and industries |
Macroeconomics |
The study of the economy as a whole or one of its principal sectors |
Consumer |
Individuals or groups that purchase and use goods to satisfy their wants and needs. |
Producer |
Individuals or businesses that create goods and services to meet consumer demand. |
Goods |
A tangible object or material that can be purchased to satisfy human wants or needs. |
Services |
An intangible action or activity that is performed for a fee to satisfy human needs and wants. |
Resources |
Anything used to produce goods or services |
Technology |
Scientific and technical techniques used to produce existing products more efficiently or of higher quality |
Entrepreneurship |
The organizational abilities and risk taking involved in starting a new business or introducing a new product to consumers |
Scarcity |
The fundamental condition of economics that results from the combination of limited resources and unlimited wants. |
Specialization |
The focus of a worker on only one or a few aspects of production in order to improve efficiency |
Money |
Any item, typically currency, that is commonly accepted in exchange for goods, services, or settling debts. |
Credit |
A form of exchange that allows consumers to use items with a promise of repayment over a specified time |
Chapter 4 Terms
Law of Supply |
As the price of a good increases, the quantity supplied increases, and vice versa |
Cost of Production |
The total cost of materials, labors, and other inputs required in the manufacture of a product |
Tax |
A required payment to a local, state, or national government, usually made on some regular basis |
Law of Diminishing Returns |
The principle that as more of one input is added to a fixed supply of other resources, productivity will increase up to a point, after which the marginal product will diminish |
Marginal Cost |
The cost of producing one additional unit of output |
Chapter 6 Terms
Monopoly |
A market in which a somgle seller exercises exclusive or nearly exclusive control over a particular good or service |
Oligopoly |
A market in which a few large sellers control most of the production of a good or service |
Collusion |
An effort by producers or sellers of a particular product to secretly set production levels or prices |
Cartel |
A group of producers or sellers of a certain good or service who unite to control prices, output, and market share |
Antitrust Legislation |
Federal and state laws that regulate big business and labor unions to prevent or dismantle monopolies |
Product Differentiation |
An attempt by a seller in monopolistic competition to convince buyers that its product is different from and superior to the nearly identical products of competitors |
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Chapter 2 Terms
Traditional Economy |
An economy in which production is based on customs and traditions. |
Market Economy |
An economy in which the government has little to say in what, how, and for whom goods are produced and in which the factors of production are owned by individuals |
Market |
The free exchange of goods and services |
Mixed Economy |
An economy that combines elements of the traditional, market, and command economic models |
Democratic Socialism |
An economic system in which some means of producing and distributing goods are owned or controlled by an elected government |
Captitalism |
A market-based economic system in which individuals own and control the factors of production |
Communism |
An economic system in which the government owns or controls nearly all factors of production |
Free Enterprise |
A system in which private business operates with minimal government involvement |
Private Property |
Property that is owned by individuals or businesses , rather than by the government |
Income |
Money received, especially on a regular basis, for working or through investments |
Standard of Living |
People's economic well-being as determined by the quantity of goods and services they consume in a given time period. |
Chapter 3 Terms
Law of Demand |
As the price of a good decreases, the quantity demanded increases, and vice versa |
Income Effect |
The effect that a change in an item's price has on consumers' ability to purchase goods. |
Substitution Effect |
Consumers' tendency to substitute a lower-priced good for a similar, higher-priced one |
Demand Curve |
A graphic representation of a demand schedule, showing the relationship between the price of an item and the quantity demanded during a given time period. |
Elasticity of Demand |
The degree to which changes in price of a good or service affect quantity de,amded |
Chapter 5 Terms
Market Failure |
A flaw in a price system that occurs when some costs have not been accounted for and therefore are not properly distributed |
Market Equilibrium |
The point at which the quantity demanded and the quantity supplied for a product are equal at the same price |
Surplus |
When the quantity supplied exceeds the quantity demanded at a given price |
Shortage |
When the quantity demanded exceeds the quantity supplied at a given price |
Price Ceiling |
A government regulation that sets a maximum price for a particular good |
Rationing |
A system by which a government or other institution decides how to distribute a good service; rationing is usually the result of limited supply |
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