Marginal Utility
satisfaction or usefulness obtained from acquiring one more unit of a product
stock
a certificate documenting the shareholder's ownership in the corporation
corporation
an organization that is authorized by law to carry on an activity but treated as though it were a single person
partnership
a contract between two or more persons who agree to pool talent and money and share profits or losses
Sole Proprietorship
business owned and run by a single person who has the rights to all profits and unlimited liability for all debts of the firm
inflation
a general and progressive increase in prices
economics
The study how individuals, governments, firms and nations make choices on allocating scarce resources to satisfy their unlimited wants.
scarcity
Basic economic problem facing all societies. Limited quantities of resources to meet unlimited wants
GDP
Total dollar value of all final goods and services produced in a country during a single year
welfare
governmental provision of economic assistance to persons in need
recession
two or more consecutive quarters of decline in the GDP
depression
a long-term economic state characterized by unemployment and low prices and low levels of trade and investment. Lowest point in a business cycle.
European union
international organization comprised of Western European countries to promote free trade among members
trade deficit
An imbalance in international trade in which the value of imports exceeds the value of exports.
trade surplus
situation in which a country exports more than it imports
price ceiling
a maximum price that can be legally charged for a good or service
price floor
a minimum price for a good or service
NAFTA
This allows open trade with US, Mexico, and Canada
quota
a limitation on imports
tariff
a government tax on imports or exports
absolute advantage
the ability to produce a good using fewer inputs than another producer
comparitive advantage
The situation where someone can produce a good at lower opportunity cost than someone else can
fiat
money by government decree has no alternative value or use as a commodity
commodity money
A good used as money that also has value independent of its use as money.
FED
privately owned, publicly controlled, central bank of the United States
seasonal unemployment
unemployment that occurs as a result of harvest schedules or vacations, or when industries slow or shut down for a season
cyclical unemployment
unemployment directly related to swings in the business cycle
entrepreneur
a person who starts up and takes on the risk of a business
marginal revenue
the additional income from selling one more unit of a good
marginal cost
the cost of producing one more unit of a good
diminishing returns
the stage where output increases at a diminishing rate as more units of a variable input are added
law of supply
the principle that suppliers will normally offer more for sale at higher prices and less at lower prices
surplus
a situation in which quantity supplied is greater than quantity demanded
shortage
a situation in which quantity demanded is greater than quantity supplied
labor union
an organization of workers that tries to improve working conditions, wages, and benefits for its members
monopoly
control of a product or service by one company
monopolistic competition
a market structure in which many companies sell products that are similar but not identical
oligopoly
(economics) a market in which control over the supply of a commodity is in the hands of a few producers and each one can influence prices and affect competitors
law of demand
consumers buy more of a good when its price decreases and less when its price increases
mixed economy
Most common for of economic system that has some combination of traditional, command, and market economies.
traditional economy
economic system that relies on habit, custom, or ritual to decide questions of production and consumption of goods and services
market economy
an economic system based on free enterprise, in which businesses are privately owned, and production and prices are determined by supply and demand. (Capitalism)
command economy
a system in which the central government makes all economic decisions
boycott
to take part in an organized group refusal to use a product or service as a means of protest
consumer price index
index used to measure price changes for a market basket of frequently used consumer items
stagflation
a period of slow economic growth and high unemployment (stagnation) while prices rise (inflation)
frictional unemployment
A type of unemployment caused by workers voluntarily changing jobs and by temporary layoffs; unemployed workers between jobs.
structural unemployment
unemployment that occurs when workers' skills do not match the jobs that are available
factors of production
economic resources: land, capital, labor, and entrepreneurial ability
perfect competition
market structure with many well-informed and independent buyers and sellers who exchange identical products. Example=salt
opportunity cost
Cost of the next best alternative use of money, time, or resources when one choice is made rather than another
free enterprise economy
market economy in which privately owned businesses have the freedom to operate for a profit with limited government intervention
market
the world of commercial activity where goods and services are bought and sold local, regional, national, or global
trade-off
alternatives that must be given up when one is chosen over another
strike
union organized work stoppage designed to gain concessions from an employer
mediation
the process of bringing in a neutral third person or persons to help settle a dispute
business cycle
systematic changes in real GDP marked by alternating periods of expansion, contraction, and possibly recessions and depressions
stock exchange
a place where shares in a company or business enterprise are bought and sold
substitute
a competing product that consumers can use in place of another
subsidy
government payment to encourage or protect a certain economic activity
circular flow model
A model that shows the flow of goods and services and the interaction among households, businesses, and banks
compliment
products that increase the use of other products
product market
market where goods and services are offered for sale
factor market
market where productive resources are bought and sold
socialism
An economic system in which government owns some factors of production and has a role in determining what and how goods are produced to even out society.
Inelastic demand
A situation in which an increase or a decrease in price will not significantly affect demand for the product
elastic demand
A situation in which consumer demand is sensitive to changes in price
equilibrium
the point at which quantity demanded and quantity supplied are equal
bull market
Rising stock market
bear market
a stock market with declining stock prices
FDIC
a federally sponsored corporation that insures accounts in national banks and other qualified institutions
FOMC
the most powerful committee of the Fed, because it makes the decisions that affect the economy as a whole by manipulating the money supply
exports
Goods and Services sold to other countries
imports
goods brought into a country
hyperinflation
inflation that is out of control. Over 500%.
creeping inflation
inflation in the range of one to three percent each year.
galloping inflation
a more intense form of inflation that can go as high as 100 to 300 percent.
stock market
A system for buying and selling shares of companies
share
one portion of ownership in a corporation
sales tax
a tax based on the cost of the item purchased and collected directly from the buyer
property tax
a tax on the value of a property
income tax
a tax on people's earnings
sin tax
relatively high tax to raise revenue and discourage consuption of a socially undesirable product
estate tax
a levy imposed on the assets of one who dies
April 15
deadline for filing your income tax return