Economics Test 6

Economics

Economics

The study of the choices that individuals and societies make in the production, distribution, and consumption of goods

Economy

system for the production, distribution, and consumption of goods

Common Store System

all people shared equal in food, supplies, shelter, etc.

Pilgrim’s 2nd Economy

they worked for their own benefit; nothing was given for free or without labor

Economists

scholars of the production, distribution, and consumption of goods within an economy

Macroeconomics

the study of national and international economics; large-scale choices and public policies

Microeconomics

specific components within a major economy; how individual choices affect a large economy

Economic Models

the relationship among the various components (characteristics) within an economy

Economic Forecast

Predictions about the future of an economy

Interest rates, growth of wages, unemployment, etc.

Good

A tangible item that an individual wants and is expected to be paid for

Service

intangible goods or actions produced by labor for which people expect to pay

Want

the human desire to have and use a good or service

Market

A mechanism that allows people to exchange goods

Mass Market

very large number of people to whom very large quantities of products are sold

Supply

the amount of a good that is produced or available

Demand

the amount of a good that is desired or bought at a certain price under a certain condition

Work

intelligent or physical labor used in providing a good or service; all good and services must be worked for

Producers

individuals who work to provide goods

Consumers

people who use goods

Economics

What is the study of that material side of life in which everything has to be worked for and paid for

Prodigality

a bad habit of spending more for wants/needs than one can afford

Need

something it would be difficult to live without (usually fewer than wants)

Consumer Goods

directly used by consumers

Technology

industrial skills and scientific methods that make possible efficient production

Value

the worth that a consumer attaches to a good

Utility

usefulness of an item

Scarcity

how much of a good is available to be sold or created

Political Economy

original name of economics due to government influence on economic matters

Carl Menger

What is Diamond-Water Paradox created by

Laws of Economics

general rules that guide the production, distribution, and consumption of goods

Mercantilism

an economic system that advocates the building up of the state’s treasury with the goal of accumulating as much wealth (gold) as possible

Trade Balance

the difference between the amount of goods a nation sells and the amount that it buys

Tariffs

taxes government used to discourage imported goods

Imperialism

the establishment of colonies and territories for the benefit of their mother countries

Samuel du Pont

published Physiocracy (“the rule of nature”)

Laissez-faire

“let things alone”; the government should leave the economy to operate itself with little intervention

Classical Economics

A belief system that originated with physiocrats

Adam Smith

the founder of modern economics

Adam Smith

“Father of modern economics”

Wealth of Nations

Most famous economic book in history; established basic principles of modern economics (1776)

Division of Labor

separation of complex work into individual tasks to increase productivity

Specialization

allowing an individual to excel in one specific area of his field resulting in higher quality products are service

Labor

single most important aspect of any economy; without this, an economy will suffer or fail results in a productive economy

Producer’s Desire

to sell

Consumer’s Desire

to buy

Prosperity

general economic success; the ability to enjoy man different goods and services

Wealth

the value of goods and finances that a person owns

Work

What is the true source of prosperity?

Information

sometimes listed as a 5th factor of production

Traditional

the economy and its rules are based on custom, heredity, and caste

Command Economy

the centralized authority (government) operates and regulates the economy; also called planned or directed

Free Enterprise

the people of the nation are free to make their own economic decisions; also called capitalism

Mixed Economy

a combination of capitalism and heavier government regulation; America is an example

Full Employment

anyone who wants to work has a job (3-4% employed)

Conservatives

economic growth over equity

Liberal

equity overgrowth

Land

usually most expensive; price will vary depending on location (city, country, farmland, etc.)

Minerals

precious metals with intrinsic value; sone have technological or architectural value

Animals

meat and animal by-products also provide value for businesses

Renewable Energy Resources

biomass, hydro-power, geothermal, wind, the sun, coal, petroleum, natural gas, nuclear power

Nonrenewable Energy Resources

cannot be replaced or take a long time to be regenerated

Labor

any work that contributes to the production of goods and services

Cost of labor

most of the price we pay for good pays for the labor used to make it; labor is usually the most expensive factor

Free Labor

free people will work harder and more effectively than people who aren’t free

Productivity

measure of how efficiently resources are employed

Capital

tangible producer goods

Subsistence Economy

an economic system that provides barely enough to keep a society alive; in this system, capital goods are not used effectively

Private Capitalism

a system in which the majority of a nation’s capital is owned and controlled by private individuals and businesses; capital is used effectively in this

State capitalism

a system in which the government will control and operate much (if not all) of a nation’s capital; capital is not used effectively in this

Capitalist

someone who owns or uses capital goods to produce other goods

Entrepreneurship

the intelligent supervision of the other factors of production (A.K.A. Management)

Entrepreneur

someone who starts a business undertaking, risking his own time, money, etc.

E.I. du Pont

One of the 1st American businessmen to profit from selling gunpowder

Real Property

tangible items

Financial Property

money and investments

Intellectual Property

creative labor (music, patents, etc.)

Enterprise

the freedom to use your own finances

Competition

rivalry between similar businesses; results in lower prices for consumers

Limited Government

little to no government restriction on property, businesses, investment, etc.

Circular Flow Model

the flow of the economic choices that are made by private households and private businesses

Capitalism

What is free enterprise also called

America

What country is an example of a mixed economy

Economic stability

What is one of the is government’s main responsibility

Land

What is considered a raw material

Intrinsic

What value does Minerals have

labor

What is usually the most expensive factor

Prosperity

What does labor result in for a nation

Property

What right of an individual is the cornerstone of capitalism

Private households and private businesses

The flow of the economic choices are made by what 2 groups

Demand

the amount of a good that is bought at a certain price under certain conditions; the relationship between a good’s price and the amount that people are willing and able to buy

Supply

quantity of a good at a certain price under certain conditions; relationship between a good’s price and the amount a producer supplies for a consumer

Value in Use

value gained from the direct benefit of using a good; this value varies from person to person

Value in Exchange

value gained exchanging for another good

Price

the amount of money an individual will pay for an item; value in exchange

Market Price

the price at which a good can be sold in a market; AKA “store price” of a good

Marginal Utility

the amount of satisfaction gained from using one unit of a good

Total Utility

the amount of satisfaction gained from using all units of a good

The Basic Law of Demand

Other things remaining equal, as the price of a good increases, the quantity demanded decreases

Income Effect

when the price of a good falls, more of that good will be bought; the opposite is true as well