Markets
Markets
The means by which buyers and sellers carry out exchange
Household
Plays the leading role in the economy. Consumers who demand the goods and services produced.
Firms
An economic unit formed by a profit-seeking entrepreneur who combines resources to produce goods and services and who accepts the risk of profit and loss.
Negative Externalities
By-products of production or consumption that impose costs on third parties
Market Economy
Describes the U.S. economic system, where markets play a relatively large role.
Human Resources
The broad category of human efforts, both physical and mental, used to produce goods and services.
Sunk Cost
A cost you have already paid and cannot recover, regardless of what you do now
Positive Externalities
By-products of consumption or production that benefit third parties
Pure Market Economy
An economic system with no government so that private firms account for all production.
Natural Resources
So-called “gifts of nature” which include land, forests, minerals, oil reserves, bodies of water, and even animals.
Antitrust Laws
Laws that reduce anticompetitive behavior and promote competition in markets where competition is desirable
Public Goods
Goods that, once produced, are available to all, but the producer cannot easily exclude nonpayers
Pure Command Economy
An economic system in which all resources are government-owned and all production is directed by the central plans of government.
Capital Goods
All human creations used to produce goods and services.
Natural Monopoly
One firm that can serve the entire market at a lower per-unit cost than two or more firms can
Private Goods
Goods with two features: (1) the amount consumed by one person is unavailable to others, and (2) nonpayers can easily be excluded
Traditional Economy
An economic system shaped primarily by custom or religion
Marginal
Incremental, additional, extra, or one more; refers to a change in an economic variable, a change in the status quo
Opportunity Cost
The value of the best alternative passed up for the chosen item or activity
Open Access Goods
Goods that are rival in consumption but exclusion is costly