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Micro - Ch. 1
Microeconomics - Ch. 1 - Welcome to Economics!
| Term | Definition |
|---|---|
| circular flow diagram | a diagram that views the economy as consisting of households a firms interacting in a goods and services market and a labor market |
| command economy | an economy where economic decisions are passed down from government authority and where resources are owned by the government |
| division of labor | the way in which the work required to produce a good or service is divided into tasks performed by different workers |
| economics | the study of how humans make choices under conditions of scarcity |
| economies of scale | when the average cost of producing each individual unit declines as total output increases |
| exports | products (goods and services) made domestically and sold abroad |
| fiscal policy | economic policies that involve government spending and taxes |
| globalization | the trend in which buying and selling in markets have increasingly crossed national borers |
| goods and services market | a market in which firms are sellers of what they produce and households are buyers |
| gross domestic product (GDP) | measure of the size of total prodution in an economy |
| imports | products (goods and services) made abroad and then sold domestically |
| labor market | the market in which households sell their labor as workers to business firms or other employers |
| macroeconomics | the branch of economics that focuses of broad issues such as growth, unemployment, inflation, and trade balance |
| market | interaction between potential buyers and sellers; a combination of demand and supply |
| market economy | an economy where economic decisions are decentralized, resources are owned by private individuals, and businesses supply goods and services based on demand |
| microeconomics | the branch of economics that focuses of actions of particular agents within the economy, like households, workers, business firms |
| model or theory | a representation of an object or situation that is simplifies wile including enough of the key features to help us understand the object or situation |
| monetary policy | policy that involves altering the level of interest rates, the availability of credit in the economy, and the extent of borrowing |
| private enterprise | system where the means of production (resources and businesses) are owned and operated by private individuals or groups of private individuals |
| scarcity | when human wants for goods and services exceed the available supply |
| specializaion | when workers or firms focus on particular tasks for which they are well-suited within the overall production process |
| traditional economy | typically and agricultural economy where things are done the same as they have always been done |
| underground economy | a market where the buyers and sellers make transactions in violation of one or more government regulations ex - the black market |
| 1) it allows the agents to focus on areas of individuals and firms to specialize and to produce more for several reasons 2) it encourages the agents to learn and invent 3) it allows agents to take advantage of economies of scale | what does the division of labor do |
Created by:
Kendall Posey
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