Econ ch 10

  1. Microeconomics
    The study of individual decision-making units and markets within the economy.
  2. Household
    A person living alone or a group of related or unrelated persons who occupy a house, an apartment, or other housing unit.
  3. Personal Income
    Household gross, or pretax, income; used to pay taxes, spend and save.
  4. Transfer Payment
    Money from the government for which no direct work is performed in return.
  5. Durable Good
    A good that has a useful lifetime of more than one year, such as a car.
  6. Nondurable good
    A good that has a short useful lifetime, such as food or gas.
  7. Maximizing Economic Well-Being
    Obtaining the greatest possible satisfaction, or return, from an economic decision. It is a balancing process that involves weighing the advantages or benefits and the disadvantages or costs of different courses of action and selecting thoses choices.
  8. Utility
    Satisfaction realized from consuming a good or service. When you buy lunch or put gas in your car, you receive utility.
  9. Total Utility
    Total satisfaction from consuming a particular combination of goods and services.
  10. Business
    An organization established to produce and sell goods and services.
  11. Proprietorship
    One owner business
  12. Unlimited Liability
    A business owner's personal assets are subject to use as payment for business debts. The owner's personal assets are subject to use as payment for business debts.
  13. Partnership
    The legal organization of a business that is similar to a proprietorship but has two or more owners.
  14. General Partner
    An owner in a partnership who is subject to unlimited liability. A general partner is one who has the burden of unlimited liability.
  15. Corporation
    A legal entity, owner by stockholders; can carry on in its own name business functions normally performed by individuals. A 'legal person' created by law that can be sued, make contract, pay fines and carry on other aspects of business normally performed by individuals.
  16. Preferred Stock
    Pays a stated dividend to its holder; preferred stockholders are entitled to receive dividends before common stockholders.
  17. Common Stock
    Pays a dividend dependent on the profit of a firm after all other financial obligations (creditors and preferred stockholders) have been met.
  18. Corporate Board of Directors
    Governing body of a corporation; elected by stockholders, makes many major decisions
  19. Bond
    A financial instrument through which a corporation can borrow long term funds. Corporations can borrow large amounts of money for building, expansion, and other purposes by selling bonds.
  20. Merger (acquisition)
    The acquiring of one company by another; can be accomplished by buying a controlling amount of stock.
  21. Conglomerate Merger
    A corporation acquires another corporation that produces unrelated goods and services.
  22. Vertical Merger
    A corporation acquires another corporation that supplies its inputs or distributes its products.
  23. Horizontal Merger
    A corporation acquires another corporation that competes in the same market such as Pizza Hut, Taco Bell or Kentucky Fried Chicken.
  24. Holding Company
    A corporation formed for the purpose of owning or holding stock in other corporations. This type of company produces nothing itself.
  25. Revenue
    Money or income that a company receives from selling its profit.
  26. Profit or Loss
    What results when a business subtracts its costs from its revenue.
Card Set
Econ ch 10
econ ch 10 vocab