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Semester exam- Econ

2nd Semester exam study guide for economics

QuestionAnswer
Capital A resource made by humans and used to create other goods and services.
Efficiency Serve each individual or entity.
Goods Satisfy human wants.
Trade-off The alternative we sacrifice when we make a decision.
Production possibilities graph Examine the opportunity cost of a decision can decided using.
Scarcity Scarcity- Limited quantities of resources to meet unlimited wants.
Services Labor that requires specialized skills and education.
Shortage Temporary lack of one or more goods.
Opportunity cost The most desirable alternative given up as the result of a decision.
Under-utilization The use of fewer resources than the economy is capable of using.
Labor The effort people devote to tasks for which they are paid.
Factors of production Land, labor, and capital, the 3 groups of resources that are used to make all goods and services.
Elasticity of demand A measure of how consumers react to a change in price.
Substitution effect When consumers react to an increase in a good’s price by consuming less of that good and more of a substitute good.
Law of demand As the price of a product increases, quantity demanded falls. As the price of a product decreases, quantity demanded increases.
Complement Cars and gasoline. A change in demand for one has a direct effect on the other.
Substitute A good that can be consumed in place of another good.
Total revenue The amount a firm receives for the sale of of its output.
Normal good A good that consumers demand more of when their incomes increase.
Inferior good A good that consumers demand less of when their income increases.
Demand curve A graph of the relationship between the quantity demanded of a good and its price when all other influences on buying plans remain the same.
Ceteris paribus Other things remaining the same.
Economics of scale Factors that cause a producer’s average cost per unit to fall as output rises.
Trust The arrangement under which the owners of several companies transfer their decision-making powers to a small group of trustees.
Franchise The right to sell a good or service within an exclusive market.
Oligopoly A business made up of semi independent businesses that all offer the same product or service.
Barrier to entry Any factor that makes it difficult for a new firm to enter a market.
Price war A series of competitive price cuts that lowers the market price below the cost of production.
Antitrust laws Encourages competition in the marketplace.
Market power The ability of a company to change prices and output like a monopoly.
Differentiation Making a product different from other similar products.
Perfect competition All human-made goods that are used to produce other goods and services, tools and buildings.
Bear market A steady drop or stagnation in the stock market over a period of time.
Bull market A steady rise in the stock market over a period of time.
Equities Represents investments by stockholders in the company.
Investment The use of of assets to earn income or profit.
Money market Network of corporations, financial institutions, investors and government that deal with the flow of short-term capital.
Portfolio A collection of financial assets.
Primary market A market for selling financial assets that can be redeemed only by the original holder.
Prospectus An investment report that provides information to potential investors.
Return The money an investor receives above and beyond the sum of the money initially invested.
Speculation The practice of making high-risk investments with borrowed money in hopes of getting big return.
Free market economy Needs some government convention to decide over a market place.
Socialism Government controls one aspect of the economy.
Karl Marx Communist Manifesto.
Adam Smith A free market philosopher.
Vladimir Engels Communist leader for the former soviet union.
Market system An economic system in which property resources are privately owned and markets and prices are used to direct and coordinate economic activities.
Inelastic supply of good The quantity demanded or supplied of a good or service is unaffected when the price of that good or service changes.
Price ceilings A maximum price that can legally charge for a good or a service.
Minimum wage Lowest wage that can be paid to most workers.
Natural monopoly A market that runs most efficiently when a large firm supplies all of the output.
Non-price competition A way to attract customers through style, service, or location, but not a lower price.
Credit union A non-profit financial cooperative owned by its member.
Mortgage A specific type of loan that is used to buy real estate.
Diversification (in the financial market) The strategy of spreading out investments to reduce risk.
Bonds Person who buys a bond is lending money to the government or corporation that sells the bond.
Savings bonds A low-denomination bond issued by the United States Government.
Dow Jones Industrial Average An index that shows how the stocks have traded.
GDP (Gross Domestic Product) The market value of all the final goods and services produced within a country at a given time period.
Great Depression The severe economic decline that began in 1929 and lasted for a decade.
Non-durable good Goods that last a short period of time, such as food, light bulbs, and sneakers.
Know an example of a shortage Limited amounts of food, because the truck are carrying it are on strike.
Characteristics of a centrally planned economy Government owns all factors of production, no consumer sovereignty, and government planners decide what goods and services will be produced.
Advantages of a free market Encourages growth.
Government roles in a free enterprise system Allowing individuals to operate their business to in ways they think will maximize their profits.
Effect of technology on the economy Stronger and more efficient.
Example of a public good Roads and parks.
Future price in relation to current demand Price is expected to rise, the command will rise.
Principle of law and demand The quantity demanded of a good falls when the price of the good rises.
Example of the law of supply Company increases the amount of product they supply, and the price increases.
Example of a good with an inelastic supply Fruit or food.
What factor has the greatest influence of elasticity and in-elasticity of supply? Time
What is a fixed cost for a store? Light bill, water bill, power bill, rent, wages.
What are conditions for perfect competition? Wide variety of products in a condition.
Functions of a natural monopoly Single firms supply all the output.
Advantages of sole propiertorships It's the least regulated.
Examples of a barter system Pay for their money back by doing work around the house.
What is the purpose of the FDIC? The government agency that insures customer deposits if a bank fails.
Examples of a durable good A used car.
Know what happens to the quantity supplied when the selling price of a good goes up The price goes down.
Know an example of a good whose price went down because of improvements in technology Gasoline
What would cause the market to behave inefficiently? Competition
Why were command economic systems used for many years by Communist governments? Create a society in which everyone is equal.
Know what type of natural monopoly the U.S. government permits? Many companies selling similar but no identical products.
Know the benefits of a partnership versus a sole proprietorship A business owned and controlled by one person.
What percentage of businesses are sole proprietorship? 75%
Why is investing in a money market mutual fund a higher risk than investing in a CD (certificate of deposit)? Invested in a variety of stocks and bonds.
Created by: Katwill678
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