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Externality
unintended side effect of an action
Monopoly
sole provider of a good or service
Merger
combination of two or more companies into a single business
Recall
situation in which an unsafe product is pulled off the market
Antitrust Law
legislation to preserve competition
Public Goods
They are paid for through taxes and other fees collected by government.
Federal Trade Commission
government agency maintaining competition in the marketplace
Private Companies
often owns natural monopolies of water and sewer services
FDA
government agency ensuring truth in product advertisements
Market Economy
Individuals and businesses own the resources used to produce goods and services
Traditional Economy
Economic questions are answered on the basis of habit or custom
Command Economy
Planners who work for the government answer the economic questions
Economics
The study of how people use limited resources to satisfy unlimited wants
Mixed Market Economy
Government and private business owners play roles in a competitive-for-profit system
Capital Resource
factory building is an example of this type of resource
Scarcity
all resources are limited, but wants are not
Economic Questions
what, how, and for whom to produce
Market Economy
economic decisions made based upon price
Opportunity Cost
The cost of the next-best use of your money or time when you choose to do one thing rather than another
Fixed Costs
Expenses that do not change no matter how much a business produces
Variable Costs
Expenses that change depending on how much a business produces
Marginal Cost
The increase in expenses caused by producing an additional unit of something
Trade-off
Giving up one alternative good or service for another
Fixed Costs
electric bill is an example of this
Marginal Revenue
The additional income received from each increase of one unit in sales
Benefit-Cost Analysis
What businesses utilize when making decisions among various projects
Standard of Living
quality of life based on the possessions of necessities and luxuries
Natural Resources
materials in nature that make production possible
Gross Domestic Product
value of annual output in a country
Capital
tools, machinery, and buildings used to make products
Entrepreneurs
people who take risks to start new businesses or introduce new products
United States Production
one-fifth of all goods and services in the world
GDP
reflects the price of All final goods and services
GDP per Capita
better measure than GDP when comparing economic activity of countries
GDP
measures the amount produced within a country as well as a nation's income
Economic Freedom
U.S. marketplace can adapt quickly to changing economic conditions
Supply and Demand
forces that decide what producers will produce and what consumers will purchase
Profit Motive
incentive that drives the U.S. economy
Competition
among producers leads to greater efficiency, higher-quality products, and more satisfied customers
Private Property Rights
owning, keeping, and using something you purchase any way you wish
Citizens
make most of the economic decisions in the United States
Voluntary Exchange
activity that takes place in the markets
CJ
entrepreneur who invested $1.50 in savings to start a business
Adam Smith
argued that people should work for their own self-interest
Developing Countries
countries with low GDPs per capita
Newly Industrialized Countries
growing economic powers that have not yet reached the level of output of developed countries
Privatization
process of changing state-owned businesses into ones owned by private citizens
Supply and Demand
economic decisions based on in countries switching from command to market economies
Debt
problem faced by many developing countries that borrowed large sums of money
Newly Industrialized Countries
Countries that have rapidly developed industrial sectors and are experiencing quick economic growth.
Privatization
The transfer of ownership of businesses or properties from the government to private individuals or companies.
Supply & Demand
The relationship between the availability of a good or service and the desire for it, influencing its price in the market.
Debt
Money borrowed by individuals, organizations, or countries that needs to be repaid with interest.
Factors of Production in a Market Economy
Owned by individuals, including resources like land, labor, and capital used to produce goods and services.
Command Economy Advantage
Ability to redirect resources rapidly to meet changing needs or priorities.
Government Role in a Mixed Economy
Involvement in setting minimum wages to ensure fair compensation for workers.
Single-Resource Economy
Relies heavily on the export of one primary product for its economic sustenance.
