Econ Quiz 1
Terms
undefined, object
copy deck
- command system
- government controls the factors of production
- capital
- assets available for use in the production of further assets
- law of increasing opportunity costs
- producing one more unit of output costs more and more in variable inputs
- substitute good
- the two kinds of goods can be consumed or used in place of one another in at least some of their possible uses.
- allocative efficiency
- The situation that occurs when no resources are wasted - when no one can be made better off without making someone else worse off.
- productive efficiency
- Getting the most possible production of goods and services from the factors of production (natural resources, labor, capital) being used
- normal good
- A good for which as income rises, people buy more of the good
- investment
- laying out money or capital in an enterprise with the expectation of profit
- inferior good
- A good for which demand rises if real income falls or for which demand falls if real income rises.
- law of demand
- The observation that when price rises, quantity demanded falls
- price ceiling
- a government-imposed limit on how high a price can be charged on a product
- Entrepreneurial ability
- the human resource which combines the basic resources to produce a product, makes non - routine decisions, innovates, and bears risks.
- average tax rate
- The average tax rate is computed by dividing total taxes paid by the tax base.
- marginal tax rate
- A taxpayer's highest rate - that which he or she pays on the last dollar earned in a given year.
- complementary good
- a good which is consumed with another good
- durable goods
- a good which does not quickly wear out, or more specifically, it yields services or utility over time rather than being completely used up when used once
- medium of exchange
- Any item that is widely accepted in exchange for the goods and services
- opportunity cost
- cost in terms of foregoing alternatives
- law of supply
- At higher relative prices, the quantity supplied of a good will increase; at lower relative prices, smaller quantities will be supplied.