Fundamentals of Economics
What is the study of how people make choices to satisfy unlimited wants with limited resources?
What is economics?
An economic system where individuals own most resources and make economic decisions.
What is free enterprise (capitalism)?
The willingness and ability of consumers to buy a good or service.
What is demand?
The amount of a good producers are willing and able to sell at different prices.
What is supply?
The price where quantity supplied equals quantity demanded.
What is equilibrium price?
The basic economic problem caused by scarcity that forces people to make choices.
is trade-off?
An economic system in which the government owns and controls most resources.
What is communism?
The law that states when prices rise, quantity demanded usually falls.
What is the Law of Demand?
The law that states higher prices encourage producers to supply more.
What is the Law of Supply?
When quantity demanded is greater than quantity supplied.
What is a shortage?
What you give up when you choose one option over another.
What is opportunity cost?
An economic system that combines elements of both market and command economies.
What is a mixed economy?
A good for which demand increases as income increases.
What is a normal good?
Costs of production, technology, or taxes can cause this to move.
What is a shift in the supply curve?
When quantity supplied is greater than quantity demanded.
What is a surplus?
Goods that are tangible and can be touched, like cars or phones.
What are goods?
The freedom of consumers to decide what to buy in a free enterprise system.
What is consumer sovereignty?
A change in demand caused by factors other than price, like income or tastes.
What is a shift in the demand curve?
A payment by the government to help producers lower costs.
What is a subsidy?
A legal maximum price that can be charged for a good.
What is a price ceiling?
The idea that people and businesses respond to rewards and penalties.
What are incentives?
The struggle among producers to attract customers by lowering prices or improving quality.
What is competition?
A good people buy more of when its price goes down, such as movie tickets.
What is elastic demand?
A tax placed on producers that usually decreases supply.
What is an excise tax?
A legal minimum price that can be charged for a good.
What is a price floor?