Economic Terms
This term is the total market value of all final goods and services produced in a year.
What is the Gross Domestic Product (GDP)
This economic law states when price rises demand falls and vice versa.
What is the Law of Demand?
In this system, individuals and businesses make most of the economic decisions with little government involvement.
What is a market economy?
This term refers to the human effort that is used in the production process.
What is labor?
“The father of Modern Economics"
Who is Adam Smith?
The term represents the value of the next best thing.
What is opportunity cost?
When the quantity of demand is equal to the quantity of supply.
What is Equilibrium?
This type of economy combines elements of both market and command economies.
What is a mixed economy?
This factor of production encompasses the tools and machinery.
What is capital?
This theory, developed by Adam Smith, emphasizes the benefits of individuals pursuing their own self-interest in a free market.
What is the theory of the invisible hand?
This term to the rise in price over time.
What is Inflation?
This part of the graph shows the relationship between the price of a good and the quantity of demand.
What is the demand curve?
This system is based on traditions, customs, and beliefs, typically in rural or agricultural societies.
What is a traditional economy?
This factor of production includes all natural resources.
What is Land?
People make economic decisions by comparing the marginal benefit of an action to its marginal cost.
What is marginal utility?
This is the additional cost of producing one more good or service.
What is the marginal cost?
This type of good experiences an increase in demand as consumer’s incomes rise.
What is a normal good?
This economic system is characterized by private ownership and the goal of profit
What is capitalism?
This term describes the ability to combine and organize the other factors of production to create goods and services.
What are entrepuerneurs?
This principle, explains the equilibrium price and quantity of a good.
What is market equilibrium?
This measure of responsiveness shows how much the quantity demanded of a good changes in response to a change in its price.
What is the price elasticity?
This term refers to a situation where an increase in income causes the demand for a good to decrease, as people prefer more expensive alternatives.
What is an inferior good?
This term refers to a market-based system with minimal government roles.
What is the laissez-faire market?
This is essential for any economic activity and includes both physical and human resources required to produce products and services.
What are the Factors of Production
This theory focuses on the benefits of trade based on comparative advantage, where countries specialize in producing goods they can produce more efficiently.
What is comparative advantage?