Economics Vocab Ch. 1, 2, 3, 4, 10
Terms
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- self-interest
- one's own personal gain
- profit
- the financial gain made in a transaction
- socialism
- a social and political philosophy based on the belief that democratic means should be used to evenly distribute wealth throughout society
- cost
- to an economist, the alternative that is given up because of a decision
- production possibilities frontier
- the line on a production possibilities graph that shows the maximum possible output
- continuum
- a range with no clear divisions
- need
- something like air, food, or shelter that is necessary for survival
- guns or butter
- a phrase that refers to the trade-offs that nations face when choosing whether to produce more or less military or consumer goods
- human capital
- the skills and knowledge gained by a worker through education and experience
- competition
- the struggle among producers for the dollars of consumers
- firm
- an organization that uses resources to produce a product, which it then sells
- services
- actions or activities that one person performs for another
- interest group
- a private organization that tries to persusade public officials to act or vote according to group members' interests
- production possibilities curve/graph
- a graph that shows alternative ways to use an economy's resources
- goods
- physical objects such as clothes or shoes
- market
- an arrangement that allows buyers and sellers to exchange things
- opportunity cost
- the most desirable alternative given up as the result of a decision
- market economy
- economic system in which decisions on production and consumption of goods and services are based on voluntary exchange in markets
- want
- an item that we desire but that is not necessary for survival
- thinking at the margin
- deciding whether to do or use one additional unit of some resource
- laissez faire
- the doctrine that states that government generally should not intervene in the marketplace
- patriotism
- the love of one's country; the passion that inspires a person to serve his or her country
- command economy
- economic system in which a central authority is in command of the economy; a centrally planned economy
- profit motive
- the force that encouprages people and organizations to improve their material well-being
- economics
- the study of how people seek to satisfy their needs and wants by making choices
- voluntary exchange
- the concept that people may decide what and when they want to sell
- free contract
- the concept that people may decide what agreements the want to enter into
- factor payments
- the income people recieve for supplying factors of production, such as land, labor, or capital
- safety net
- government programs that protect people experiencing unfavorable economic conditions
- shortage
- a situation in whicha ggod or service is unavailable
- land
- natural resources that are used to make goods and services
- scarcity
- limited quantities of resources to meet unlimited wants
- private property
- property owned by individuals or companies, not by the governmetn or the people as a whole
- labor
- the effort that people devote to a task for which they are paid
- law of increasing cost
- law that states that as we shift factors of production from making one good or service to another, the cost of producing the second item increases\
- incentive
- an expectation that encourages people to behave in a certain way
- public disclosure laws
- laws requiring companies to provide full information about their products
- economic system
- the method used by a society to produce and distribute goods and services
- heavy industry
- industry that requires a large capital investment and that produces items used in other industries
- invisible hand
- term economists use to describe the self-regulating nature of the marketplace
- communism
- a political system characterized by a centrally planned economy with all economic and political power resting in the hands of the central government
- efficiency
- using resources in such a way as to maximize the production of goods and services
- factors of production
- land, labor, and capital; the three groups of resources that are used to make all goods and services
- product market
- the market in which households purchase the goods and services that firms produce
- open opportunity
- the concept that everyone can compete in the marketplace
- public interest
- the concerns of the public as a whole
- consumer sovereignty
- the power of consumers to decide what gets produced
- centrally planned economy
- economic system in which the central government makes all decisions on the production and consumption of goods and services
- specialization
- the concentration of the productive efforts of individuals and firms on a limited number of activities
- privatize
- to sell state-run firms to individuals
- factor market
- market in which firms purchase the factors of production from households
- trade-off
- an alternative that we sacrifice when we make a decision
- free enterprise
- an economic system characterized by private or corporate ownershipof captal goods; investments that are determined by private decision reather than by state control; and determined in a free market
- capital
- any human-made resource that is used to create other goods and services
- authoritarian
- requiring strict obedience to an authority, such as a dictator
- entrepreneur
- ambitious leader who combines land, labor and capital to create and market new goods and services
- competition
- the rivalry among sellers to attract customers while lowering costs
- physical capital
- all human-made goods that are used to produce other goods and services
- transition
- period of change in which an economy moves away from a centrally planned economy toward a market-based system
- collective
- large farm leased from the state to groups of peasant farmers
- household
- a person or groupof people living in the same residence
- traditional economy
- economic system that relies on habit, custom, or ritual to decide questions of production and consumption of goods and services
- legal equality
- the concept of giving everyone the same legal rights
- private property rights
- the concept that people have the rihgt and privilege to control their possessions as the wish
- underutilization
- using fewer resources than an economy is capable of using
- mixed economy
- market-based economic system with limited government involvement
- standard of living
- level of economic prosperity