Economic Vocabulary Essay

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Alina Pasha Economic Vocabulary 1. Scarcity: A limited amount of something, perhaps in short supply. 2. Macroeconomics: The study of a nation’s economy. 3. Microeconomics: The study of the economy of businesses, individuals, and firms in a single market. 4. The four factors of production (CELL): - Capital: Assets, machines, and money used as a man made input into production. - Entrepreneurship: Management, and ideas. - Land: Natural resources or improvements on land as well as actual land are included in “land”. - Labor: Human effort put into production which maybe physical or mental. 5. Three questions that must be addressed before distribution of resources: - What? : This is important because it determines the slope of the economy and society…show more content…
Production Possibility curve: tells how much you can produce of the product with the available resources, and what the opportunity cost would be. 7. Trade-off: The choice that is made of the allocation of resources in which you have to lose something. 8. Opportunity cost: What is lost in a trade-off. 9. Traditional economy: maintains a pattern that has been successful. It is stable, but doesn’t allow any economic growth. 10. Command economy: Government owns all factors of production, and for whom, how, and what they produce. This is done to make wealth distribution fair but, doesn’t have many benefits because people have no motivation to work hard, and the goods being produced aren’t what people need. 11. Market economy: People own all firms, and resources. The problem with this is that the distribution of wealth isn’t always fair. 12. Ceteris paribus: Latin for “everything remains the same” in economics it means if you want to see how one change effects the economy you keep everything else the same. 13. Adam Smith’s metaphor means if there is no outside (government) interference with the market supply, and demand will generate equilibrium because of the motive of maximum profit.…show more content…
The relationship between a change in the complimentary goods price and the demand of another good is a negative relationship if the price of one goes up then the demand goes down of the other. 25. Law of diminishing marginal utility: The more you consume of a certain good the less satisfaction you will get from it. 26. Demand curve: Shows the relationship between price and quantity demanded. 27. The five determinants of demand (P.O.I.N.T): - Price of related goods - Outlook - Income - Number of consumers - Tastes 28. Elastic demand: When demand is very responsive to price change. 29. Inelastic demand: When demand is not very responsive to price change; an example of this is water: no matter the price you will need to buy water. 30. Law of supply: The more the price the more that good will be sold (“the higher the price, the higher the supply; the lower the price, the lower the supply”). 31. The five determinants of supply (G.O.S.P.I.T): - Government policies - Outlook - Size of industry (or the number of producers) - Price of related product lines - Input costs - Technology 32. Market equilibrium: Is the point where the seller is willing to sell, and the buyers are willing to buy at the same price. This price is known as the market clearing or equilibrium

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