chapter 2
Factors of production must be used wisely.
economic efficiency
goods and services that are useful, relatively scarce, and transferable to others.
Economic Products
the condition that results from society not having enough resources to produce all the things people would like to have.
Scarcity
philosophy that government should not interfere with commerce or trade.
Laissez-faire
the use of advertising, giveaways, or other promotional campaigns to convince buyers that the product is somehow better than another brand.
Nonprice competition
protection from such adverse economic events such as layoffs or illness.
economic security
where producers sell their goods and services to consumers.
Product Market
Some necessities, such as water, have little monetary value, whereas some non-necessities, such as diamonds, have a much higher value.
Paradox of value
market structure with only one seller of a particular product
Monopoly
the market structure that has all the conditions of perfect competition except for identical products
Monopolistic Competition
equal pay for equal work
economic equity
when manufactured goods are used to produce other goods and services.
Capital Goods
sum of the skills, abilities, health, and motivation of people.
Human Capital
the nature and degree of competition among firms operating in the same industry
Market Structure
products that are collectively consumed by everyone, and whose use by one individual does not diminish the satisfaction or value available to others.
Public goods
people want their economic system to provide as many jobs as possible because it is the way they provide for their families.
full employment
accumulation of those products that are tangible, scarce, useful, and transferable from one person to another.
Wealth
a rise in the general level of prices.
inflation
products that vary in quality and type (ex: candy bars)
Differentiated products
large number of well-informed independent buyers and sellers who exchange identical products.
Perfect Competition
helps people feel certainly about the future.
price stability
we rely on others, and others rely on us, to provide the goods and services that we consume.
Economic Interdependence
an income that does not increase even though prices go up.
fixed income
to a market structure that lacks one or more of the conditions of perfect competition.
Imperfect competition
real or imagined differences between competing products in the same industry
Product differentiation