Economic Terms and Concepts (Part 1) - CE. 11, CE. 12, and CE. 13

Competition

Rivalry between sellers of similar goods/services that leads to lower prices and better quality for consumers.

Investment

Buying something (like stock) with the hope of making more money from it in the future.

Stock

A piece of ownership in a company; a form of investing in a company.

Entrepreneur

A person who comes up with new ideas in search of profit.

Corporation

Company sells stock to many people who all own a very small part of the company. Risk and profit are limited to how much is invested.

Partnership

2+ owners share risk and profit.

Proprietorship (Sole-Proprietorship)

One owner takes all the risk and keeps all the profit.

Specialization

Focusing on a specific economic activity (example: Japan's focus on manufacturing electronics like computers; Brazil's focus on coffee production).

Monopoly

A company that controls all production and sales of a particular product or service, often resulting in higher prices for the consumer (not legal in the U.S.).

Resources

Factors of production (ingredients) used in production of goods and services- there are 4 kinds

Natural- anything people can use that comes from nature, like wood, water, iron ore and coal

Human- workers (labor) - plus their talent, ideas, skills

Capital- machinery, tools, trucks, factories, and equipment

Entrepreneurship- people who are willing to take a risk to develop new products or start a new business

Supply

Amount of good or service that producers are willing to sell at a certain price.

Demand

Amount of a good or service that consumers are able to buy at a certain price, or the amount they want.

Profit

The difference between the amount a good is sold for and the cost to produce it (expenses).

Scarcity

When there is not enough of something to meet the demand.

Opportunity cost

The most valuable thing you give up when you make a choice.

Choice

Selecting an item or an action from a set of all the possible alternatives.

Markets

Where goods and services are sold, prices are determined in markets.

Consumer Sovereignty

Consumers determine, through their purchases, what goods and services will be produced; the consumer is "king"!

Globalization

Process of spreading ideas, products, and other aspects of culture throughout the world.

Circular (Economic) Flow

The movement of goods, services, and money among household, businesses, and markets in the U.S. Economy.

Incentives

Motivation to buy or do something.

Traditional Economy

Economic decisions are based mainly on what happened in the past (customs and traditions passed down from generation to generation).

Command Economy

The government makes the economic decisions and controls the means of production (farms, factories and mines).

Free Market Economy (Free Enterprise)

Individuals and businesses make all of the economic decisions.

Mixed Economy

It is a blended economy. It combines a free market private sector with a public sector run by the government.

Means of Production

The farms, factories, and mines of a nation.