Basic Economic Definitions Power Point

 

For each word or term on this sheet, write the definition as it appears.  Beneath each of those words, write the word or term and its definition as it appeared in the power point from which you took notes.  In other words, you will write a word or term and its definition as it appears on this review sheet THEN find that word or term in your notes and write it and its definition, then proceed to the next word on this sheet.  In some cases, the word or term will not appear in your notes because some of these words and terms are new (though very similar).  In those cases, you need only to write the word or term as it appears on this review sheet.  If there is any word in the definition you do not know, please look it up.  And as always, complete this assignment in your own handwriting on a sheet of paper.  Please write neatly.  This assignment is due on the day of the exam.

 

1) economics - the study of scarcity, the study of how people use resources and respond to incentives; the study of decision-making.

 2) scarcity - the fundamental economic problem of having limited resources to meet unlimited wants and needs.

 3) opportunity cost - the value of the next-best alternative you give up when you make a choice;

 4) trade-off - a situation where you must give up one benefit or item to gain a different, competing benefit.

 5) trade-off vs. opportunity cost - A trade-off is the general compromise of giving up one thing to get something else, while opportunity cost is the specific economic value of the single best alternative you gave up.

 6) economy - a large system where people, businesses, and governments make, share, buy, and sell goods and services.

 7) mixed economy - an economic system that combines private enterprise and free-market freedom with government intervention and public services.

 8) free market - an economic system where prices and services are set by supply and demand with little or no government control.

 9) free market economics – an economic system with the following characteristics: 1) voluntary Exchange: Buyers and sellers trade freely because both sides believe they benefit;  2) no Government Intervention: Prices, wages, and production levels are not fixed by laws, taxes, quotas, or central planning; 3) Private Property: Individuals and private businesses own resources and the means of production; 4) Competition: Businesses compete for customers, which can lead to lower prices and better products

 10) command economy - an economic system where a central government makes all decisions about what to make, how to make it, and who gets it.  A command economy has the following characteristics: 1) central control: The government decides production goals, sets prices for goods, and controls the distribution of resources;  2) government ownership: the government owns major industries, land, and the means of production instead of private citizens; 3) supply and demand do not determine prices or output.

 11) microeconomics - a branch of economics that studies how individual people, households, and businesses make decisions to use their limited money and time.

 12) macroeconomics - the branch of economics that studies the behavior, performance, and structure of an entire economy on a large scale; the study of whole economies—the part of economics concerned with large-scale or general economic factors and how they interact in economies.

 13) market - any physical place, virtual space, or system where buyers and sellers meet to exchange goods, services, or information.

 14) supply - the total quantity of a product or service that is available for purchase, influenced by production capabilities and market conditions.

 15) demand - the relationship between the quantity of a good or service that consumers are willing to purchase and its price.

 16) Features of the “Law of Supply” - higher prices: makers of goods and services produce more because they can make a bigger profit; lower prices: makers of goods and services produce less because they make less money. The basic rule: as the price goes up, the supply goes up. As the price goes down, the supply goes down

 17) Features of the “Law of Demand” - higher prices: people buy less because the item costs too much;  lower prices: people buy more because the item is a good deal.  The rule: As the price goes up, the demand goes down. As the price goes down, the demand goes up.

 18) Law of Supply and Demand - the relationship between the quantity of a good or service that consumers are willing to purchase and its price.

 19) goods - tangible items or products that satisfy human wants, provide utility (satisfaction), and have economic value; goods can be seen, touched, and physically possessed or transferred.

 20) services - an intangible act, performance, or experience that one party offers to another in exchange for money or value.

 21) intermediate goods - inputs that businesses purchase and use up, transform, or combine to produce other goods or provide final services; products or services utilized during a production process that are not sold directly to the final end consumer.