ECON MT
factors of production
an economic term that describes the inputs that are used in the production of goods or services in order to make an economic profit. The factors of production include land, labor, capital and entrepreneurship.
economic system
an organized way in which a country allocates resources and distributes goods and services across the whole nation or a given geographic area. It is used to control the factors of production
structural unemployment
arises when workers experience longer periods of frictional or cyclical unemployment
absolute advantage
it is the ability of a country, individual, company or region to produce a good or service at a lower cost per unit than the cost at which any other entity produces that same good or service
Market Economic System
it is very similar to a free market. The government does not control vital resources, valuable goods or any other major segment of the economy. In this way, organizations run by the people determine how the economy runs, how supply is generated, what demands are necessary, etc.
opportunity cost
implies the value of choice foregone, to get something else ; Cost of giving up an alternative when making a choice
Invisible underemployment
includes workers who work 40hrs per week or even more in their jobs but their talents are underutilized or they receive inadequate compensation for their work
Visible underemployment
includes workers who work for less than 40hrs per week and who look for additional work
Determinants of Demand
income, taste and preference, price of related goods, changes in speculations, populations
Stagflation
inflationary period accompanied by rising unemployment and lack of growth in consumer demand and business activity
Microeconomics
is a branch of economics that examines the market behavior of individual consumers and organizations; it focuses on the demand and supply, pricing, and output of individual organizations
Macroeconomics
is a branch of economics which studies the economy as a whole; it deals with issues related to national income, employment pattern, inflation, recession, and economic growth
Trade-off
is a term used to describe the courses of action given up in order to perform the preferred course of action ; Occurs when an individual has made a choice, thereby sacrificing all other alternativ e choices
Entrepreneurship
is the drive to develop an idea into a business. An entrepreneur combines the other three factors of production to add to supply
frictional unemployment
occurs when a worker is "between jobs," which means that he or she has left a job and is looking for another
demand-pull inflation
occurs when the overall demand for goods and services in an economy increases more rapidly than the economy's production capacity
interest
payment for labor
wages
payment for labor
absolute poverty
poverty wherein conditions where an individual cannot meet the most basic commodities to sustain life and other normal activites
Determinants of Organizational Structure
prices of inputs or cost of producing the good. technology, taxes and subsidies, number of sellers or firms in the industry
Hyperinflation
rapid, excessive, and out of control price increases in an economy
labor
refers to human inputs such as manpower skills that are used in transforming resources into different products that meet our needs
Capital
refers to manufactured resources such as factories and machines. These are man-made goods used in the production of other goods
demand
refers to the amount of goods or services consumers are willing to purchase given a certain price
unemployment
refers to the portion of the labor force who is willing to engage in productive activities yet fails to do so
Underemployment
refers to the state of an individual being employed, but his or her talents and expertise are underutilized or are not matched to the job
land
represents all the natural resources, such as timber and gold, used in the production of a good which exist without man's intervention; payment for land is called rent
invisible hand
tendency of free markets to regulate themselves by means of competition, supply and demand, and self-interest
comparative advantage
the ability to produce a good at a lower opportunity cost than another trade partner
supply
the willingness and ability of sellers to produce and offer to sell a good at a various possible prices
theory of coordinatiom failure
underdevelopment is caused by uncoordinated activities in the market
New Growth Theory
underdevelopment is due to slow transmission of technology to developing countries
Neoclassical Theory
underdevelopment is mainly caused by domestic issues brought about by poor economic policies and resource allocation, as well as government corruption
seasonal unemployment
when people find themselves unemployed at certain times of the year
production possibility frontier
A graph that shows all the combinations of goods and services that can be produced if all of society's resources are used efficientl
economic development
Sustained elevation of an entire society and social system toward a better and more humane life
cost-push inflation
a result of the increase in the prices of production process inputs
Inflation
a sustained increase in the general price level of goods and services in an economy over a period of time
built in inflation
a type of inflation that results from past events and persists in the present
Economics
branch of Social Science which deals with the allocation of scarce resources in order to satisfy unlimited human wants and needs
positive economics
branch of economic based on data and facts
normative economics
branch of economics based on values, opinions and judgement
cyclical unemployment
brought about by changes in the economy or business
Command Economic System
characterized by a dominant centralized power (usually the government) that controls a large part of all economic activity. This type of economic system is usually found in communist countries.
Mixed Economic System
combines elements of the market and command economy. Many economic decisions are made in the market by individuals, but the government also plays a role in the allocation and distribution of resources. It is sometimes referred to as a dual economy
applied economics
concerned with using economic theories and models, as well as related principles and concepts to understand contemporary socioeconomic issues
relative poverty
condition in which people lack the minimum amount of income needed in order to maintain the average standard of living in the society in which they live
quality of life
considers aspects such as health, nutrition, education, environment, and income distribution in analyzing development
sustainable development
considers the impact of human activities on the environment and believes that environmental degradation has significant economic impact
Traditional Economic System
focuses exclusively on goods and services that are directly related to its beliefs, customs, and traditions
O-Ring Theory
development is a result of effiecient production wherein similarly skilled workers work together to accomplish tasks
structural change model
development is defined by the reallocation of labor from agriculture to industrial sector
international dependence
dominance of developed countries and multinational corporations over developing countries leads to dependence and underdevelopment
Linear Stages of Growth
economic development is a process which follows a sequence of historical stages: (1) traditional society (2) preconditions for take off (3) take- off (4) maturity and (5) high mass consumption
level production
economic growth is measured by the increase in a country's GDP
Adam Smith
father of economics ; proposed the idea of invisible hand ; also known for creating the concept of GDP