What are economics?
The fundamental problem of economics; having unlimited wants but limited resources.
What is scarcity?
The ¨Invisible Hand¨ theory suggests this type of economy regulates itself without government interference.
A business owned and managed by a single individual.
What is a Sole Proprietorship?
This law states that as price goes up, the quantity demanded goes down.
What is the Law of Demand?
The law states that as the price of a good increases, producers will offer more of it for sale.
What is the Law of Supply?
The value of the next best alternative given up when making a choice.
What is opportunity cost?
In this system, the central government makes all important decisions regarding production and distribution.
What is a Command Economy?
The major disadvantage of proprietorships, meaning the owner is personally responsible for all business debts.
Goods that are used together, such as peanut butter and jelly or printers and ink.
What are Complements?
A government payment that supports a business or market to encourage production.
What is a Subsidy?
The four ¨factors of production¨ used to produce goods and services.
What are Land, Labor, Capital, and Entrepreneurship?
Most modern national economies follow this system, blending elements of market and government involvement.
What is a Mixed Economy?
A legal entity owned by individual stockholders, which has rights like a person.
What is a Corporation?
A shift in the entire demand curve, rather than a movement, along the curve, is caused by this.
What is a Change in Demand?
The point where the quantity demanded and the quantity supplied are equal.
What is Equilibrium?
A graph that shows the maximum combinations of two goods an economy can produce.
What is Production Possibilities Curve?
The philosopher and author of The Wealth and Nations who is considered the father of Modern Economics.
Who is Adam Smith?
A semi-independent business that pays fees to a parent company in return for the right to sell their product.
What is a Franchise?
If a price increase hardly changes the quantity demanded (like medicine) demand is said to be this.
What is Inelastic?
What is a Fixed Cost?
The study of economic behavior and decision-making in small units, such as individuals and firms.
What is Microeconomics?
The economic goal of ensuring that goods and services are distributed fairly.
A combination of two or more firms involved in different stages of producing the same good or service.
What is a Vertical Merger?
The principle that as you consume more of a good, the extra satisfaction you get from each new unit decreases.
What is the Law of Diminishing Marginal Utility?
When the quantity supplied is greater than the quantity demanded, this occurs.
What is a Surplus?