1. opportunity costs
    people evaluate both the benefits and the costs of their choices. because of scarcity, every decision to acquire a good or service or to spend time or money in a certain way has a cost attached to it.
  2. scarcity
    there is not enough, nor will there ever be enough, goods or services to satisfy all the wants and needs of all individuals, families, and socieities.
  3. equity
    justice or fairness
  4. wages
    income for labor
  5. rent
    income from land resources
  6. profit
    income to the entrepreneur
  7. economic policy
    take action or doing something about it, usually a result of a decision of a policy maker.
  8. production possibilities
    various combinations of goods that an economy can produce with full employment and fixed resources and technology
  9. capital goods
    machinery/equipment to produce
  10. consumer goods
    food and household furniture that are produced for final buyers.
  11. basic economic decisions
    • what to produce
    • how to produce it
    • who gets the goods
  12. price system
    • market system
    • decisions are made by individuals
    • rely on prices as teh way buyers and sellers communicate
  13. pure market economy
    basic decisions are made by individuals.
  14. socialism
    economic system where many factors of production are collectively owned and attempts are made to equalize the money between the people
  15. planned economy
    • command economy
    • decisions are made by planners and there are no private property rights. resources are owned by the people or the government.
  16. laissez fair economy
    • capitalism
    • no governmental interference
  17. employment act
    • after ww2
    • federal govertment had the right and responsibility to provide an environment of full employement, full production, and stable prices. congress could manipulate taxes and governmental spending and run deficit budgets in an effort to bring economy to where they wanted it.
  18. demand schedule
    • relationship between amount of product a consumer will by and product's price.
    • quantity demand falls as price rises/quantity demand rises as price drops
  19. law of demand
    inverse relationship etween price and quantity
  20. substitute goods
  21. demand curve
    • downward sloping line on graph
    • consumers demand more at lower prices
  22. surplus
    quantity demanded is less than supplied.
  23. shortage
    quantity demanded is greater than supply
  24. price floor
    lower price limit
  25. price ceiling
    upper price limit
  26. change in quantity demand
    a change in the price causes a change in the quantity purchased.
  27. change in demand
    change caused by non price factors.
  28. stagflation
  29. equilibrium price
    the price that sellers set that buyers are comfortable with buying.
  30. elasticity
    a strong response to a price change
  31. types of unemployment
    • frictional -- people are voluntarily out of work
    • cyclical -- seasonal work
    • structural -- job is no longer there
  32. full employment
    occurs when those who want to be unemployed are and everyone else is working
  33. discouraged workers
    worker who drops out of the labor force because they have not been successful at finding a job.
  34. inflation
    increased prices
  35. cost push
    increases in seller's costs are passed on to buyers.
  36. demand pull
    buyers demands are greater than seller's supply
  37. underemployment
    not to full potential
  38. injection
    spending over what household earned income is
  39. leakage
    income that households are not spending
  40. transfer payment
    income for no service or good
Card Set
midterm study