Holt Economics Chapters 1-6
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Economics
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The study of how a society chooses to use scarce resources to satisfy unlimited wants and needs.
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Microeconomics
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The study of a single factor of an economy - such as individuals, households, businesses, and industries
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Macroeconomics
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The study of the economy as a whole or one of its principal sectors
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Consumer
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Individuals or groups that purchase and use goods to satisfy their wants and needs.
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Producer
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Individuals or businesses that create goods and services to meet consumer demand.
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Goods
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A tangible object or material that can be purchased to satisfy human wants or needs.
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Services
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An intangible action or activity that is performed for a fee to satisfy human needs and wants.
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Resources
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Anything used to produce goods or services
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Technology
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Scientific and technical techniques used to produce existing products more efficiently or of higher quality
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Entrepreneurship
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The organizational abilities and risk taking involved in starting a new business or introducing a new product to consumers
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Scarcity
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The fundamental condition of economics that results from the combination of limited resources and unlimited wants.
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Specialization
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The focus of a worker on only one or a few aspects of production in order to improve efficiency
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Money
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Any item, typically currency, that is commonly accepted in exchange for goods, services, or settling debts.
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Credit
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A form of exchange that allows consumers to use items with a promise of repayment over a specified time
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Law of Supply
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As the price of a good increases, the quantity supplied increases, and vice versa
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Cost of Production
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The total cost of materials, labors, and other inputs required in the manufacture of a product
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Tax
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A required payment to a local, state, or national government, usually made on some regular basis
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Law of Diminishing Returns
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The principle that as more of one input is added to a fixed supply of other resources, productivity will increase up to a point, after which the marginal product will diminish
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Marginal Cost
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The cost of producing one additional unit of output
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Monopoly
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A market in which a somgle seller exercises exclusive or nearly exclusive control over a particular good or service
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Oligopoly
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A market in which a few large sellers control most of the production of a good or service
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Collusion
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An effort by producers or sellers of a particular product to secretly set production levels or prices
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Cartel
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A group of producers or sellers of a certain good or service who unite to control prices, output, and market share
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Antitrust Legislation
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Federal and state laws that regulate big business and labor unions to prevent or dismantle monopolies
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Product Differentiation
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An attempt by a seller in monopolistic competition to convince buyers that its product is different from and superior to the nearly identical products of competitors
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Traditional Economy
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An economy in which production is based on customs and traditions.
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Market Economy
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An economy in which the government has little to say in what, how, and for whom goods are produced and in which the factors of production are owned by individuals
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Market
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The free exchange of goods and services
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Mixed Economy
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An economy that combines elements of the traditional, market, and command economic models
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Democratic Socialism
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An economic system in which some means of producing and distributing goods are owned or controlled by an elected government
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Captitalism
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A market-based economic system in which individuals own and control the factors of production
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Communism
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An economic system in which the government owns or controls nearly all factors of production
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Free Enterprise
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A system in which private business operates with minimal government involvement
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Private Property
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Property that is owned by individuals or businesses , rather than by the government
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Income
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Money received, especially on a regular basis, for working or through investments
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Standard of Living
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People's economic well-being as determined by the quantity of goods and services they consume in a given time period.
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Law of Demand
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As the price of a good decreases, the quantity demanded increases, and vice versa
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Income Effect
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The effect that a change in an item's price has on consumers' ability to purchase goods.
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Substitution Effect
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Consumers' tendency to substitute a lower-priced good for a similar, higher-priced one
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Demand Curve
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A graphic representation of a demand schedule, showing the relationship between the price of an item and the quantity demanded during a given time period.
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Elasticity of Demand
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The degree to which changes in price of a good or service affect quantity de,amded
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Market Failure
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A flaw in a price system that occurs when some costs have not been accounted for and therefore are not properly distributed
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Market Equilibrium
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The point at which the quantity demanded and the quantity supplied for a product are equal at the same price
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Surplus
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When the quantity supplied exceeds the quantity demanded at a given price
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Shortage
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When the quantity demanded exceeds the quantity supplied at a given price
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Price Ceiling
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A government regulation that sets a maximum price for a particular good
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Rationing
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A system by which a government or other institution decides how to distribute a good service; rationing is usually the result of limited supply
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