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Econ 1
| Question | Answer |
|---|---|
| Trade-off | The act of giving up one benefit in order to gain another greater benefit |
| "guns or butter" | Government must chose spending on military or spending on domestic needs |
| Opportunity cost | The most desirable alternative somebody gives up as the result of a decision |
| Thinking at the margin | The process of deciding how much more or less to do |
| Cost/Benefit Analysis | Analyzing what will be sacrificed and what will be gained |
| Marginal Cost | Added cost of adding one unit |
| Marginal Benefits | Extra benefit of adding one more unit |
| Production Possibilities Curve | Graph that shows alternative ways to use an economy's resources |
| Production Possibilities Frontier | Line on a production possibilities curve that shows the maximum possible output an economy can produce |
| Useful information from a production possibilities curve | 1. shows if an economy is growing 2. shows opportunity cost of producing more of one good or service |
| Efficiency | Using resources in such a way as to maximize the output of goods and services |
| Underutilization | Any point inside the production possibilities frontier(use of fewer resources than the economy is capable of using) |
| When a production possibilities curve "shifts to the right".... | Economy grows |
| When a production possibilities curve "shifts to the left"... | A countries production capacity decreases |
| Law of increasing costs | As production shifts from making one item to another, more and more resources are necessary to increase production of the second item. |
| List a company's resources | Land, natural resources, physical capital, human capital |
| Technology | Process used to create goods and services |
| Technology is a factor that increases a nation's ________. | efficiency |
| Consumer | A person who purchases goods and services |
| Producer | A person who supplies goods and services |
| Need | Anything necessary for survival |
| Want | Anything people consume beyond what is necessary for survival |
| Natural resource | A natural item, such as farmland, that is used to produce goods and services |
| Capital resource | A manufactured item, such as a tractor, that is used to produce goods and services |
| Money | Used as a standardized basis of exchange |
| Credit | Allows a consumer to pay for an item over time |
| Economics | The study of how individuals, businesses, and government make choices when faced with a limited supply of resources |
| Goods | Physical objects someone produces. Ex: clothing, video games |
| Services | Action or activities that one person preforms for another |
| Scarcity | When limited amount of goods and services are available to meet unlimited wants |
| Shortage | Occurs when customers want more of a good or service than producers are willing to make available at a particular price |
| Entrepreneurs | People who decide how to combine resources to create new goods and services |
| Three factors of production | Land, Labor, Capital |
| Two types of capital | Human, Physical |
| Physical Capital | Human made objects used to create other goods and services |
| Human Capital | Knowledge and skills a worker gains through education and experience |
| Benefits of Capital | Physical capital saves time and money and with human capital, the more skilled the worker the more he can produce in a given time |
| Land | Natural resources used to product goods and services |
| Labor | Effort people devote to tasks for which they are paid |
| Cost | Any human made resource that is used to produce other goods and services |
| Any human made resource that is used to produce other goods and services | Capital |
| Opportunity costs | The most desirable alternative given up as the result of a decision |
| Why would a corporation sell stock? | To raise money for the business |
| Share | Part of a stock |
| Two ways owners can make money on stocks | Dividends =portion of a corporations profit paid out to stock holders, Capital gains =difference in the selling price and purchase price that results in a monetary gain for the seller |
| Income stock | Equity security that pays regular, often steadily increasing dividends |
| Growth Stock | Does not pay dividends to stock holders, earnings are reinvested in the company projects |
| Common Stock | Have voting rights |
| Preferred Stock | No voting rights, but receive dividends befor the owners of common stock |
| Stock Split | Each individual share of stock splits into more than one share |
| Why do corporations split their stock? | To keep the price of the stock low so anyone who wishes to purchase it can afford it |
| What are the biggest risks associated with buying stock? | Firms selling stock may earn lower profits than expected, dividends are less that expected. The cost of a stock could go down, you would lose money selling it. |
| Stockbroker | Middleman between buyers and sellers |
| Brokerage Firm | Businesses that specialize in stock trades |
| Stock exchange | Market for buying and selling stock |
| Biggest difference between NYSE and NASDAQ | NYSE is a brick and mortar building where people physically trade stock. NASDAQ is over the internet |
| Day trading | People who buy and sell stock rapidly in a short amount of time |
| What is the Dow Jones Industrial Average? | Stock market where 30 major companies buy and sell stock |
| 30 | Number of companies trading on the Dow |
| Standards and Poor 500 | Tracks the performance of 500 stocks as a measure of the overall stock market performance |
| Bear Market | Poor market, steadily decreasing |
| Bull Market | Strong market, steadily increasing |
Created by:
sudokken
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