FBLA Economics

Price Floor

Minimum Price of something

Price Ceiling

Maximum Price of something

Tariff

Tax on Imports

Comparative Advantage

A firm can produce their product at a lower cost, and therefore can lower the price to the public

Marginal Social Cost (MSC)

the total cost to society as a whole for producing one further unit in an economy

Marginal Private Cost (MPC)

change in the producer's total cost brought about by the production of an additional unit (marginal cost of production)

Marginal External Cost (MEC)

total incurred cost change of some households or businesses due to a unit change in other households' or businesses change in consumption or output

Negative externality

an individual or firm making a decision does not pay full cost for decision; cost to society is greater than the consumer is paying for it

Law of demand

as the price of product increases, quantity demanded falls, and as the price decreases the demand increases

firm

a business that sells goods or services to make a product

sherman antitrust act of 1890

first measure past by us congress to prohibit trusts; "Comprehensive charter of economic liberty aimed at preserving free and unfettered competition as the rule of trade."

federal trade commission act

bans "unfair methods of competition and unfair or deceptive acts or practices"

clayton act

addresses mergers, interlocking directorates, discrimitory prices etc.

monetary policy

actions of a central bank that determine the size and rate of growth of the money supply, and in turn affects interest rates

fiscal policy

gov't policies that influence macro eco to improve unemployment rates, control inflation

Free Rider Problem

individuals consume more than fair share of common resource

P

stands for price

Q

stands for quantity

AC

stands for average cost

ATC

stands for average total cost

TR

stands for total revenue (quantity x price)

TC

stands for total cost (atc x q)

MR

stands for marginal revenue (additional revenue gained when the output increases by 1)

MC

stands for marginal cost (change in TC/change in Q)

MP

stands for marginal product (change in total output/change in labor)

Income

money received for work or investments

prime lending rate

the lowest rate of interest at which money may be borrowed commercially

price elasticity of demand

% change in demand/ % change price

anti trust laws

"competition laws" statute developed by us gov't to protect consumers from predatory business practices

opportunity cost

the value of what is given up

crowding out effect

gov't borrowing that leads to less private borrowing and investing

subsidy

sum of money granted by the gov't or public body to assist and industry/bus. to keep prices low or competitive

binding price ceiling

price ceiling below the equilibrium price; Q demanded will increase and amount supplied will decrease, causing shortage

protectionist policies

benefit economy in that area

quota

gov't imposed trade restriction that limits number imports/exports

contractionary fiscal policy

decrease gov't spending or increase taxes, leads to less deficit or more surplus

expansionary fiscal policy

increase gov't spending or decrease taxes to stimulate economy

reserve requirement

minimum banks must hold from customer deposits in reserves

demand deposit

customers can withdraw money without notice

accounting profit

money made - explicit costs

economic profit

money made - (explicit + implicit)

monopsony

one buy many sellers

oligopoly

small amount firms has majority of market

discretionary spending

gov't spending through appropriations bill

non discretionary spending

gov't spending required by law, by a commitment

progressive tax

more imcome = higher taxes

regressive tax

larger percent from low income people than high income

perfect competition

many different buyers and sellers

monopoly

one producer and many buyers, able to change price freely

monopolistic competition

numerous competitors, but each different products

interstate commerce

crosses state lines

intrastate commerce

within state lines

federal income tax

tax levied by nat'l gov't on annual income

state/local income tax

levied by state or local gov't on annual income, not all states

payroll tax

tax an employer witholds and or pays on behalf of employees based on wage or salary of employee

ex. medicare and social security

unemployment tax

federal tax to laid off workers

sales tax

imposed by gov't, set by state, retailer collects and passes to state

foreign tax

income tax paid to foreign gov't

Federal Insurance Contributions Act (FICA)

taken from employees and employers: 6.2% social security, 1.45% medicare, 0..9% surtax when over $200,000 (employee only)

North American Free Trade Agreement (NAFTA)

went into effect Jan 1, 1994, no trade restrictions between us, canada, and mexico

aggregate supply

total supply of goods and services in an economy

opportunity benefit

what is gained from a choice

price discrimination

changing different prices to different consumers for the same product

consumer sovereignty

the consumer dictates what is produced

economics

social science that describes the factors that determine production, distribution, and consumption

Adam Smith

1776 The Wealth of Nations, part of scottish enlightenment; free trade

David Ricardo

british political economist, The Principles Of Political Economy And Taxation (1817); free trade, distribution, rent/value

FUKUZAWA YUKICHI

Japan founding father, science look at economics

Karl Marx

Communism mostly, German philosopher 1800s

AMARTYA SEN

China india famines, writes about, more ethical outlook on economics

John Maynard Keynes

economic thinker 20th cent., argues full employment not automatic

Alan Greenspan

appointed 1987 Federal Reserve Board under ronald reagan until 2006

Ronald Reagan

pres. that incurred the most nat'l debt

U.S. Fiscal year

lasts from oct. 1 to sept. 31

Blue Chip

nationally recognized, well-established and financially sound company

Patent

legal protection for an inventor of a product or process, indicating that they have an exclusive right to it for 17 years

General Agreement on Tariffs and Trade (GATT)

its purpose was the "substantial reduction of tariffs and other trade barriers and the elimination of preferences, on a reciprocal and mutually advantageous basis."

conglomerate merger

merger between firms that are involved in totally unrelated business activities. Pure conglomerate mergers involve firms with nothing in common, while mixed conglomerate mergers involve firms that are looking for product extensions or market extensions.

North Atlantic Treaty Organization

intergovernmental military alliance based on the North Atlantic Treaty which was signed on 4 April 1949

law of supply

an increase in price results in an increase in quantity supplied. In other words, there is a direct relationship between price and quantity: quantities respond in the same direction as price changes.

price inelastic

quantity demanded does not changed according to price changes

Yellow dog contract

contract in which employee will not join or remain in union, sent to employer

private sector

is the part of the economy that is not state controlled, and is run by individuals and companies for profit. The private sector encompasses all for-profit businesses that are not owned or operated by the government.