Studied by 278 people
Gross domestic product
total value of goods and services produced in the economy during a given period, usually a year
Unemployment
the total number of people who are actively looking for work, but aren’t currently employed
Inflation
a rise in overall price levels
Utility
The want satisfying power of a good and service
Economic resources
The land, labor, capital and entrepreneurial abilities that are used to produce goods or services
factors of production
Economic resources (inputs) Land, capital, labor, entrepreneurship
Land
natural resources used to produce goods or services
Capital
Human made resources- machines, equipment-used to produce goods and services
Labor
Physical and mental talents and efforts of people used to produce goods and services
Entrepreneurship
Taking risks to create new enterprises (businesses); innovating to develop new products and production process
Full employment
Use of all available resources, which satisfy human wants directly
Capital goods
Goods that do not directly satisfy human wants
Production possibilities curve (PPC)
Curve showing the combinations of 2 goods or services
Oppertunity cost
What you must give up in order to get a product or choice
Scarcity
Resources are in shot supply; Unlimited wants with limited resources
Law of increasing opportunity cost
As the production of good increases the opportunity cost of producing an additional unit rises (vs. Constant)
Economic growth
An outward shift in the PPC from an increase in quantity or quality or resources, or technological improvement; increase in GDP
Pure capitalism
An economic system in which property resources are privately owned; markets and prices direct and coordinate economic activity
Command economy
An economic system in which property resource are publicly owned; the government uses central ecnomic planning to direct economic atvites
Mixed economy
An economic system in which has elements of a free market (private property) and command (govt. control)
Market
Any institution or mechanism that brings together buyers (demanders) and sellers (suppliers) of a particular good or service
Demand
Amount consumers are willing to buy
Demand schedule
A chart showing the amounts of goods or services buyers wish to purchase at various prices during a time period
Law of demand
The principle that an increase in a products price will reduce the quantity
Demand curve
Line showing amount consumers desire of a certain good
Diminishing marginal utility
In short term, people will derive less and less satisfaction for each additional unit of a good purchased
Income effect
A change in the price of a consumer good changes a consumer’s purchasing power thus the quantity of the good purchased
Substitution effect
A change in the price of a similar good changes the relative expensiveness of the good
Determinants of demand
Factors other than price that indicate consumer choice
Subsititue good
Products or services that can be used in place of each other; when the price of one falls so does the demand for the other
Complimentary good
Products or services that can be used together; when the price of one falls the demand for the other increases (and vice versa)
Supply
Amount producers are willing to sell
Law of supply
Principal which states that an increase in the price of a product will increase the quantity of it supplied (or the opposite)
Determinants of supply
Factors other than supply which determine the quantities supplied
Surplus
The amount by which the quantity supplied exceeds the quantity demanded at a specific- above equilibrium - price
Market equilibrium
An economic situation in which no individual would be better off doing something different; supply equal to demand
Incentive
Something that motivates a person or group to act: reward
Absolute advantage
When one can produce more with the same resources
Comparative advantage
When one can produce more with a lower opportunity cost
Specialization
When one concentrates on the activity one is better at doing
Business cycle
The short-run alteration between economic downturns, known as rescissions, economic upturns, known as expansions
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