Economic Vocabulary Flashcards
(27 cards)
Microeconomics
Focused on individual decision making units and how they interact
Macroeconomics
Explores the economy as a whole
Scarcity
The fixed amount of goods or services available
Traditional Economy
An economic system where traditions, customs, and beliefs help shape the goods and services the economy produces as well as the role and manner of their distribution. Also referred to as a substance economy, a traditional economy is defined by bartering and trading.
Command economy
An economic system in which the means of production are publicly owned and economic activity is directed by a centra government or portion of the government
Market Economy
An economic system in which the forces of supply and demand determines what good and services are produced
Mixed economy
An economy which practice in characteristics of both command and market economies, but there is government intervention to meet certain economic goals
Opportunity cost
The cost of choosing; what you give up by choosing one option
Goods
Objects that can fulfill human wants/needs/provide utility
Services
Economic activity that is intangible; provides utility, but cannot be stored
Endowment
Natural and Human Resources from which all goods and services much be produced
-finite, but not fixed (scarcity)
Utility
Satisfaction, economists assume maximizing this drives individual choice, measured in utils
Profit motive
The tendency of people to engage in activities that will lead to monetary gain
Consumer Sovereignty
The economic power of the individual in a free market
Government regulation
Requirements the government places on private firms and individuals to achieve the government goals
Social & Economic goals
- Freedom
- Security
- Equity
- Growth
- Efficiency
- Stability
Marginal utility
Additional increment of utility associated with consuming one more unit of a good or service
Margin
In a succession of units, the specific unit you are focusing on
Total utility
The total satisfaction derived from consuming a specific quantity of a good or service; the total marginal utilities for all individual units consumed
Satiate
Satisfaction
Initial Decision
Over simplified decision making process based on utility (consume until marginal utility = 0)
Bliss point
Maximization of utility
Marginal analysis
Evaluating the impact of one additional unit
Util
A measure of utility (this is an abstract concept)
