econ units 1 + 2 key terms

Command Economy

the central government dictates the level of production of goods and controls their distribution and prices

Competition

a scenario where different economic firms are in contention to obtain goods that are limited by varying the elements of the marketing mix: price, product, promotion and place

Entrepreneurs

an individual who creates a new business, bearing most of the risks and enjoying most of the rewards

Goods

items that satisfy human wants and provide utility, for example, to a consumer making a purchase of a satisfying product

Horizontal Merger

a merger or business consolidation that occurs between firms that operate in the same industry

Human Capital

the economic value of a worker's experience and skills; includes assets like education, training, intelligence, skills, health, and other things employers value such as loyalty and punctuality

Market Economy

an economic system where two forces, known as supply and demand, direct the production of goods and services

Mixed Economy

an economic system that accepts both private businesses and nationalized government services, like public utilities, safety, military, welfare, and education

Opportunity Cost

the value of the best alternative forgone where, given limited resources, a choice needs to be made between several mutually exclusive alternatives

Physical Capital

one of the three primary factors of production; what is used to produce a good or service

Services

an act or use for which a consumer, firm, or government is willing to pay

Scarcity

the demand for a good or service is greater than the availability of the good or service

Trade-off

when you choose one thing which causes you to have to give up, or sacrifice, another

Vertical Merger

occurs when two companies previously selling to or buying from each other combine under one ownership

demand curve shift

refers to fundamental changes in the balance of supply and demand that alter the quantity demanded at the same price

demand

an economic concept that relates to a consumer's desire to purchase goods and services and willingness to pay a specific price for them

elasticity

economic measure of how sensitive one economic factor is to changes in another

equilibrium

a state in which market supply and demand balance each other. As a result, prices become stable

income effect

supply

the total amount of a specific good or service that is available to consumers

substitution effect

the decrease in sales for a product that can be attributed to consumers switching to cheaper alternatives when its price rises

profit

a company's revenue less its explicit costs as well as its opportunity cost

production possibilities curve

a model that captures scarcity and the opportunity costs of choices when faced with the possibility of producing two goods or services

IPO

initial public offering; means that a company's ownership is transitioning from private ownership to public ownership

federal reserve

the banks bank

stock exchange

market where stocks can be bought and sold

DAX

stock index that represents 40 of the largest and most liquid German companies that trade on the Frankfurt Exchange

business cycle

intervals of expansion followed by recession in economic activity

GDP

the standard measure of the value added, created through the production of goods and services in a country during a certain period (gross domestic product)

real gdp

gdp minus inflation