Economics Review Flashcards

Vocabulary flashcards on economics concepts.

Substitution Effect

When people buy a cheaper product instead of a more expensive one.

Law of Supply

As price goes up, supply goes up (and vice versa).

Equilibrium Price

The price where supply equals demand; found where supply and demand curves meet.

Elasticity of Demand

Shows how much demand changes with price. Elastic goods are luxury items; inelastic goods are necessities.

Horizontal Merger

Two similar companies merge (e.g., two car makers).

Vertical Merger

A company merges with a supplier or distributor (e.g., car maker buys tire company).

Product Differentiation

Making a product seem different from others (e.g., branding, quality, features).

Monopoly

One company controls the market. It's inefficient because there's no competition, so prices are high and quality may be low.

Monopsony

One buyer controls the market.

White-Collar Worker

Office or professional jobs.

Blue-Collar Worker

Manual labor or factory jobs.

Collective Bargaining

When workers (usually through a union) negotiate with employers for better pay or conditions.

Minimum Wage

The lowest legal pay for workers, existing to protect workers from very low pay.

Liquidity

How easily you can access your money.

SEC (Securities and Exchange Commission)

Regulates the stock market and protects investors from fraud.

Limited Liability

You're only responsible for what you invested; personal assets are protected.

Sole Proprietorship

One owner, full control, full risk.

Partnership

Two or more owners, shared control and profits.

Corporation

Separate legal entity, owned by shareholders, limited liability.

Excise Tax

A tax on specific goods.

Subsidy

A government payment to help businesses; lowers costs and encourages more production.

Equal Credit Opportunity Act (ECOA)

Federal law prevents lenders from discriminating based on race or gender.

Dow Jones Industrial Average

An index that tracks the stock performance of 30 large U.S. companies.

Dividends

Money paid to shareholders from profits.

Capital Gains

Profit from selling stock at a higher price.

Insider Trading

Illegal use of secret information to gain an advantage in trading.

Microeconomics

Study of individual choices - like consumers, businesses, and prices.

Macroeconomics

Study of the whole economy - like inflation, unemployment, and GDP.

Scarcity

Limited resources and unlimited wants.

Factors of Production

Land, labor, capital, and entrepreneurship.

Need

Something essential for survival (like food).

Want

Something you'd like to have (like a video game).

Opportunity Cost

What you give up when you choose something else.

Diminishing Marginal Utility

The more you consume something, the less satisfaction you get from each extra unit.

Laissez-faire Capitalism

An economic system where the government has little to no interference in business.

Capitalism

Little government involvement.

Socialism

Some government control to provide public services.

Communism

Total government control of the economy.