midterm

Question 1

four basic questions

Answer 1

what goods and services should be produced to meet consumer needs, how should they be produced, who should produce them, who should receive them

Question 2

traditional economy

Answer 2

economic system rooted in tradition, culture, customs, etc. (ex: fishing, bow and spear hunting)

Question 3

command economy

Answer 3

economic activity controlled by a central authority (ex: vietnam, china, cuba)

Question 4

market economy

Answer 4

economic system where economic decisions and prices are guided by interactions of the consumers (ex: us, uk, japan)

Question 5

productivity

Answer 5

efficiency, cost of production is the total of certain costs associated with the production of goods

Question 6

demand

Answer 6

the amount of goods and services customers are willing able to buy at a given price

Question 7

supply

Answer 7

the amount of goods and services available in the market

Question 8

law of demand

Answer 8

quantity purchased has inverse relationship, opposite direction (the higher the price, the lower the quantity demanded and the lower the price, the higher the quality demanded)

Question 9

law of supply

Answer 9

direct relation between price and quantity, same direction (the lower the price, the lower the quantity supplied and the higher the price, the higher the quantity supplied)

Question 10

equilibrium price

Answer 10

the quantity of goods supplied is equal to the quantity of goods demands

Question 11

price elasticity

Answer 11

the degree buyers and sellers respond to price changes

Question 12

price ceiling

Answer 12

limit on how high a price is charged for a product

Question 13

price floor

Answer 13

lowest legal price an item can be sold

Question 14

sole propiretorship

Answer 14

a business owned and operated by one person

Question 15

partnership

Answer 15

when two or more people join together as co-owners

Question 16

corporation

Answer 16

business organization most often created by under state laws, can legally enter into agreements, can own property and be sued

Question 17

franchise

Answer 17

legal contract that gives a franchisee the right to use company’s trademark or trade name, business sytems, and process to produce and market a good or service

Question 18

cost

Answer 18

value a producer gives up to produce a good or service

Question 19

conglomerate

Answer 19

corporation made up of several different, independent businesses

Question 20

price

Answer 20

amount of money that is needed to buy something

Question 21

w-4 form

Answer 21

will fill this out to let my employer know how much to withhold from my paycheck

Question 22

form w-2

Answer 22

receive this from my employer that lets me know how much money i made last year and how much was withheld for state, local and federal taxes

Question 23

anticipated income

Answer 23

the amount of income the applicant can reasonably be expected to receive during the calendar year

Question 24

discretionary income

Answer 24

money left over after a person pays their taxes

Question 25

unanticipated income

Answer 25

surplus when the state has more resources available for the upcoming year

Question 26

required deductions

Answer 26

an employer is legally obligated to withhold this money from an employee's payroll check based on federal and state laws

Question 27

voluntary deductions

Answer 27

taken for programs in which individuals participate voluntarily (ex: health, insurance, retirement)

Question 28

examples of public goods

Answer 28

law enforcement, national defense, etc.

Question 29

fixed expenses

Answer 29

remain the same price

Question 30

variable expenses

Answer 30

price can change

Question 31

assets

Answer 31

the items your company owns that can provide future economic benefit (securities, jewelry, home)

Question 32

liabilities

Answer 32

what you owe to other (taxes, rent, or mortgage payments)

Question 33

perfect competition

Answer 33

large number of firms who sell an identical product, no single firm can affect the market price, firms are free to enter and leave market at will, each firm is independent (ex: farmers market where each vendor sells the same type of jam)

Question 34

monopoly

Answer 34

single producer controls an industry, no competition, limited choice and higher prices for consumers

Question 35

comparison shopping

Answer 35

ability to compare prices on products across different retailers and choose the store where the product is cheapest

Question 36

competition

Answer 36

rivalry among sellers in the same market to win customers

Question 37

smart goal

Answer 37

specific, measurable, achievable, relevant, and time-based

Question 38

unitary elastic demand

Answer 38

change in product price causes equal change in the quantity demanded

Question 39

merger

Answer 39

joining of two firms to form a single firm

Question 40

choice

Answer 40

deciding how to best use limited resources

Question 41

economics

Answer 41

study of how society chooses to use scarce resources to produce goods and services to satisfy unlimited consumer wants and needsn

Question 42

need

Answer 42

a requirement of survival

Question 43

trade-off

Answer 43

all the options you give up when you make a choice

Question 44

opportunity cost

Answer 44

the value of the next best option you gave up when you have a choice

Question 45

resources

Answer 45

money, materials or other items that can be used to meet a want or need

Question 46

scarcity (scarce)

Answer 46

when humans want more of a resource than is available (resource is limited)

Question 47

utility

Answer 47

how useful and satisfying something is to us

Question 48

want

Answer 48

something desired but not essential

Question 49

oligopoly

Answer 49

small number of firms dominate an industry, high start up costs and obstacles

Question 50

monopolistic competition

Answer 50

all the same qualities of perfect competition, except for identical produts. they sell similar products, but have their own uniqueness.

Question 51

product differentiation

Answer 51

process of creating differences between similar goods and services

Question 52

price leadership

Answer 52

dominant firm sets price and smaller firms follow

Question 53

collusion

Answer 53

producers get together to illegally set prices

Question 54

cartels

Answer 54

formal organization of producers that agree to coordinate prices and production; illegal in us

Question 55

natural monopoly

Answer 55

situation where cost of production is minimized by having only one firm

Question 56

us economy is driven by interaction of __ and __

Answer 56

producers and consumers

Question 57

driving force for producers

Answer 57

profit

Question 58

driving force for consumers

Answer 58

getting the "biggest bang for your buck"

Question 59

inelastic demand

Answer 59

demand responds slightly or not at all to a change in price (medication, gas, salt)

Question 60

elastic demand

Answer 60

demand responds to a change in price (cars, furniture, transportation devices)

Question 61

total costs formula

Answer 61

total fixed costs + variable costs TIMES quantity

Question 62

break even prices formula

Answer 62

total costs DIVIDED by quantity

Question 63

price formula

Answer 63

break even price + profit

Question 64

productivity formulas

Answer 64

output number/hours worked or output number TIMES unit price