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capitalism
an economic and political system in which country's trade and industry are contolled by private owners for profit
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communism
all property is publicly owned and each person works and is paid according to their abilities/needs
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positive economics
a subset of economics that analyzes the way the economy actually operates
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normative economics
a subset of economics founded on value judgements and leading to assertions of what ought to be
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circular flow model
a model of how the economy's resources, money, goods, and services flow between households and firms through research and product markets
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scarcity
state of insufficency of resources to satisfy people's unlimited wants
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oopportunity cost
quantity of other goods that must be given to obtain a good
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nonrenewable resources
limited supply of the resource
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renewable resource
self-renewing natural resource
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Adam Smith's invisible hand
all of us, acting on our own self interest (greed) will benefit others in society
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origin of a graph
point of reference (0,0)
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Positive Slope
upward-sloping curves, sloping from SW to NE
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negative slope
downward-sloping curves, from NW to SE
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Hill Shaped Curve and U Shaped Curve
show relationship between the total utility or benefit derived from consuming a good and the quantity of goods consumed
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independent variable
factor you manipulate/change
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dependent variable
the result of the independent variable
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consumption good
goods that are ultimately consumed rather than used in production of another good
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capital good
a manufactured means of production
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production possibilities (and production possibilities curve)
the various combinations of goods that can be produced in an economy when it uses its available resources and technology
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equilibrium price
the price that equates quantity demanded to quantity supplied
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supply and demand relationship
an economic model of price determination in a market, which includes the need for the product and the number of products available
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