ECON Vocab 1
What is the study of the production, consumption, and distribution of goods and services?
Economics
What are characteristics of a traditional economy?
Economic system where families, clans, or tribes make economic decisions based on customs and beliefs. Beliefs and customs handed down from generation to generation.
In an economy, what is unlimited?
What is the law of supply?
As price increases, so does quantity.
What are things people like and desire.
Wants
What is a general increase in the prices of goods and services in the economy. Corresponds with decrease in the value of money.
Inflation
What is one negative aspect of a traditional economy?
Inefficiency - refuse to conform to modern technology and medicine. Relies on habit rather than innovation.
In an economy, what is limited?
Resources and Goods
What is the law of demand?
As quantity increases, price decreases (Inverse relationship)
What are things you must have to live.
Needs
What is the amount that producers are able and willing to produce and sell at all possible prices at a given time.
Supply
Describe characteristics of a command economy.
The government has full control over all economic decisions. Wants of consumers are not considered. Government also owns all means of production.
What is opportunity cost?
Cost of the missed opportunity. The missed value of every decision.
What is the equilibrium point and what is it used for?
The point in which supply and demand cross, this is where price should be set.
What is when there is not enough money for all who want it.
Scarcity
What is the goods and services that consumers in one nation buy from sellers in other nations?
Imports
Give at least three examples of command economies in our world.
Bonus: What type of government do they have?
North Korea, Cuba, North Vietnam, Russia, Venezuela
What is scarcity?
There is not enough of what everyone wants.
What will happen when the equilibrium point increases? What is the economic term used to describe this situation? Hint: try drawing a supply/demand chart
Quantity supplied will go up but quantity demanded will go down. (Surplus)
What are things that can satisfy people's wants.
Goods
what are people who buy and/or use goods and services to satisfy wants.
Consumers
What are the three characteristics of a market economy?
1. Private property rights
2. Market - any place or situation in which people buy and sell goods
3. Competition
Give an example of how scarcity occurs in our society today.
Answers can vary. Food - world hunger. Poverty.
What will happen if the equilibrium price goes down? What is the economic term we use to describe this situation? Hint: try drawing a supply/demand chart
The quantity supplied will go down and the quantity demanded increases. (Shortage)
What are payments made for the use of money.
Interest