VOCAB
Standard of living
Quality of life based on ownership of necessities and luxuries that make life easier
Circular flow chart
Circular flow of money between households, markets, and businesses.
Entrepreneur
Risk-taking individuals who introduce new products or services in search of profits; one of the four factors of production
Inflation
sustained rise in the general level of prices of goods and services
Substitutes
competing products that can be used in place of one another; products related in such a way that an increase in the price of one increases the demand for the other.
Complements
products that increase the use of other products; products related in such a way that an increase in the price of one reduces the demand for both.
Subsidy
government payment to encourage or protect a certain economic activity
Diminishing Returns
stage of production where output increases at a decreasing rate as more units of variable input are added.
Fixed costs
costs of production that do not change when output changes
Variable Costs
production cost that varies as output changes; labor, energy, raw materials
Equilibrium Price
price when quantity supplied equals quantity demanded; price that clears the market.
Surplus
Situation where quantity supplied is greater than quantity demanded at a given price.
Monopoly
market structure characterized by a single producer; form of imperfect competition
Oligopoly
market structure in which a few large sellers dominate and have the ability to affect prices in the industry; form of imperfect competition
Laissez-faire
Philosophy that government should not interfere with business activity
Mortgage
Legal document that pledges ownership of a home to a lender as security for repayment of borrowed money
Foreclosure
Process in which a lender reclaims the property due to a lack of payment by the borrower
Sole Proprietorship
unincorporated business owned and run by a single person who has rights to all profits and unlimited liability for all debts of the firm; most common form of business organization in the United States
Inventory
stock of goods held in reserve; includes finished goods waiting to be sold and raw materials to be used in production
Corporation
form of business organization recognized by law as a separate legal entity with all the rights and responsibilities of an individual, including the right to buy and sell property, enter into legal contracts, and to sue and be sued.
Stocks
certificates of ownership in a corporation; common or preferred stock
An example of a substitute is...
Chicken for steak
An example of a complement is...
Ketchup for hot dogs
If inflation is rising then so are _______
Costs/price of goods and services
If a company has a surplus of a certain good, then what do they have
A lot of that good, most likely more than they need