Econ Unit 1 test terms - Ch. 1, 2, and 10

Labor

the human effort, both physical and mental, used in the production of goods and services

Capital

a resource or asset that can be used to generate wealth

Share

a unit of ownership in a company

stockholder

an individual or entity that owns at least one share of a company

Traditional economy

an economic system where decisions about what to produce, how to produce it, and for whom are based on customs, beliefs, and historical precedent, rather than on profit or a modern market system

Perestroika

the policy of economic restructuring and reform in the Soviet Union initiated by Mikhail Gorbachev in the mid-1980s

Glasnost

the Soviet policy of "openness" under Mikhail Gorbachev, which encouraged the public discussion of social and economic problems to make the government more transparent

capitalist

an economic system where private individuals and businesses own the factors of production, and decisions about production and prices are guided by supply and demand in a competitive market, with minimal government intervention (3)

communist

an economic system where the government, not market forces like supply and demand, controls all major economic decisions

Dividend

a portion of a company's profits that is paid out to its shareholders as a distribution of earnings

Opportunity cost

the value of the next-best alternative that is given up when a choice is made

Profit motive

the ultimate goal of a business is to make money by earning revenue in excess of costs

Karl Marx

a philosopher and economist known for his critiques of capitalism

Scarcity

there are unlimited human wants and needs, but limited resources to fulfill them

Wholesaler

an intermediary in the supply chain that buys products in bulk from manufacturers and resells them in smaller, manageable quantities to retailers or other commercial businesses

Retailer

a business that buys goods or services from manufacturers or wholesalers and sells them directly to the end consumer in small quantities for personal use

Entrepreneur

an individual who creates, organizes, and manages a new business venture, taking on financial risks in the process

Partnership

a business structure where two or more people agree to combine resources, share in the profits and losses, and operate a business together

Corporation

a legal entity that is separate and distinct from its owners, who are its shareholders

Sole proprietorship

a business owned and run by one individual, with no legal distinction between the owner and the business itself

Gross income

the total amount of money earned or received from all sources over a specific period, before any deductions or taxes are taken out

Consumer good

a final product purchased for personal use and consumption, rather than for resale or use in the production of other goods

Manufacture

a person or business that transforms raw materials or components into finished goods for sale

Division of labor

the specialization of tasks within a production process, where individuals or groups focus on specific roles to increase efficiency and productivity

Adam Smith

defined economics as the "science of wealth," which he detailed in his 1776 book, An Inquiry into the Nature and Causes of the Wealth of Nations.

Nationalization

the process where a government takes control of a private company or industry, transferring it to public ownership

Mixed economy

an economic system that combines elements of both capitalism and socialism, where private individuals and businesses operate alongside government regulation and intervention.

Infrastructure

the fundamental physical and organizational structures needed for a society or enterprise to function, such as transportation, energy, and communication networks

Patent

a government-granted, limited-time monopoly that gives inventors the exclusive right to make, use, or sell their invention to encourage innovation and public disclosure of new technologies

Consumer sovereignty

the economic principle that in a market economy, consumers have the ultimate power to decide what is produced through their purchasing decisions

Interdependence

a relationship where different economies or market participants rely on each other for goods, services, or resources

Infant Mortality Rate

the number of infants who die before their first birthday, for every 1,000 live births in a given year. 

Capital good

a man-made, physical asset used to produce other goods and services, rather than for direct consumption

Underutilization

the failure to use all available resources to their fullest potential

Copyright

a limited-term government-granted monopoly that provides an incentive for creative work by allowing creators to profit from their creations, thereby promoting the public good through the dissemination of knowledge and culture

Trade deficit

when a country's imports exceed its exports in value, meaning it buys more goods and services from other countries than it sells to them

Tariff

a tax imposed by a government on imported goods, which makes them more expensive and encourages consumers to buy domestically produced products instead

Trade war

an economic conflict where countries impose retaliatory tariffs, quotas, or other barriers on each other's imports, aiming to protect domestic industries or gain an advantage

Protectionism

an economic policy where governments restrict international trade to protect domestic industries and jobs from foreign competition

Desertification

the process where productive land becomes less economically viable due to ecological degradation

NAFTA (USMCA)

an agreement that established a North American free-trade zone by eliminating or reducing tariffs and other barriers to trade and investment among Canada, Mexico, and the United States

Deforestation

the permanent conversion of forest land into alternative, more economically profitable uses

Globalization

the increasing interdependence and integration of national economies through the free flow of goods, services, capital, people, and technology

Production Possibility Curve

a graph showing the maximum combinations of two goods an economy can produce using its available resources and technology, assuming they are used fully and efficiently