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scarcity
Limited resources are insufficient to satisfy unlimited wants and needs
trade-offs
In order to gain something, one must give up something else
opportunity cost
Value of the alternative that is forgone upon making a decision
factors of production
Resources necessary for producing goods and services, *land, labor, capital, and entrepreneurship
production possibilities curve
Graph, shows the maximum feasible amounts of two goods that can be produced
demand
Consumer desire to purchase a good or service
supply
The total quantity of a good or service
market price
Current price of a good or service
circular flow model
A visual representation of how goods, services, and money move through an economy
product market
Where final goods and services are bought and sold
resource market
Where factors of production are bought and sold
competition
Rivalry among businesses to attract customers
Inflation
Rate at which the general level of prices for goods and services rises
Labor force
Total number of people available for work, (employed and unemployed)
National debt
Total amount of money that a country's government owes
Natural rate of unemployment
Level of unemployment that exists when the economy is at full employment
Progressive tax
Tax rate that increases as taxable amount increases
Proportional tax
Flat tax, asses the same tax rate regardless of income
Regressive tax
Low-income taxpayers pay a higher tax than those who have a higher income
Revenue
Money generated from operations of a business
Gold standard
Monetary system backed by the value of physical gold
Socialism
Economic and political system based on collective, common, or public ownership of the means of production
Free Enterprise System
Economy where the market determines prices, products, and services (not the gov.)
Fiat money
Backed by the government, not backed by physical commodities
perfect competition
Theoretical market structure, no monopolies present
monopoly
One firm controls the entire market
oligopoly
A few large sellers dominate the market
monopolistic competition
Companies compete in an open market, selling products slightly different from one another
sole proprietorship
One owner, pays personal income tax on profits earned from the business
partnership
Two or more partners manage and operate a business, sharing the profits
limited liability company (LLC)
Legal structure, limits the extent of an economic loss to assets invested in an organization
limited life
ogh business die whjenm you die
corporation
Legal entity created to run a business
stocks
Equity, represents the ownership of a fraction of the issuing corporation
bonds
Fixed-income instrument, represents loan made by an investor to a borrower
franchising
Business where the operator pays fees to license brand name and products
Barter
Act of trading goods or services between parties without the use of a monetary medium
Commodity money
Money with value outside of its use as currency
Credit cards
Used to pay for good or services, “borrowed money” from card company paid later
Currency
Money a government and its people use within a particular country
Debit cards
Payment card, deducts money directly from a consumer’s checking account
Financial institution
Company engaged in the business of dealing with financial and monetary transactions
Savings
Money put aside
Interest
Monetary charge for borrowing money
Investment
Capital put in expectation a positive financial return is eventually generated
Fraud
Intentional deception in order to exploit a victim
Personal bankruptcy
Person is unable to repay outstanding debts / obligations
Insurance
Creates a fund, person must pay a premium that compensates them in the case of a loss
Law of Demand
Relationship between the price of a good and the quantity demanded
Complementary Goods
Goods typically consumed together (printers, ink cartridges)
Business Cycle
Natural rise and fall of economic activity over time
FAFSA
Form students must fill out to apply for federal financial aid for college
Grants
Type of financial aid that does not need to be repaid, typically based on financial needs
Lifetime Earnings
Total amount of income a person can expect to earn over their entire career
Work-study Program
Allows students to work part-time while attending college to pay for their education
Scholarships
Provided to students based on merit or need, repayment unnecessary
Stock Market
Place where stocks and bonds are bought and sold, often a reflection of overall economic health
Charity
Donating money, goods, or time to help others in need
Mortgage
Loan used to purchase a home, typically paid back over a long period of time
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