Chapter 3 Flashcards
Utility
Household’s level of satisfaction, happiness, or sense of well-being
Household
Most important economic decision maker consisting of all those we live together under one roof
Firm
Business unit or enterprise formed by a profit-seeking entrepreneur who combines resources to produce goods and services
Industrial Revolution
Development of large-scale production during 18th century
Private property rights
Legal claim that guarantees an owner the right to use a resource or to charge others for its use
Antitrust laws
Laws that reduce anticompetitive behavior and promote competition in markets where competition is desirable
Natural monopoly
One firm that can serve the entire market at a lower per-unit cost than two or more firms can
Fiscal policy
Federal govt.’s use of taxing and public spending to influence the macroeconomy
Monetary policy
The Federal Reserve System’s attempts to control the money supply to influence the macroeconomy
Private goods
Goods with two features:
- Amt. consumed by one person is unavailable to others
- Nonpayers can easily be excluded
Public goods
Goods that once produced are available to all but the producer cannot easily exclude nonpayers
Open-access goods
Goods that are rival in consumption but exclusion is costly
Negative externalities
By-products of production or consumption that impose costs on third parties
Positive externalities
By-products of consumption or production that benefit third parties
Median income
Middle income when a group if incomes is ranked from lowest to highest
