Economics Ch. 1, 2, 3
good
a tangible item of value
profits
the amount of money left over after subtracting business expenses from business income
entrepreneurship
the bringing together of the factors of production
marginal utility
the degree of satisfaction from each additional purchase of a product or service
gross domestic product
the dollar value of all goods and services produced by an economy in a single year
marginalism
the evaluation of the usefulness of adding one more item in the production of a product or service
elasticity of supply
the extent to which supply changes following a change in price
elasticity of demand
the extent to which the dollar value of total spending changes following a change in price
consumer sovereignty
the freedom to choose which goods one can buy
trade-off
the giving up of one thing to obtain something else
Law of Supply
the idea that the quantity of a good or service demanded varies directly with its price
Law of Demand
the idea that the quantity of a good or service demanded varies inversely with changes in price
eminent domain
the power of government to seize property it intends to use for some public purpose
capitalism
an economic system in which the means of production are privately owned
public utility
an industry that serves the public interest
factor of production
an ingredient that goes into the production of a good or service
market price
the price at which the amount demanded of a good or service is equal to the quantity supplied
capital formation
the production of capital goods
standard of living
the quantity and quality of goods and services available to an individual or society
supply
the quantity of a good or service offered for sale at a particular price
demand
the quantity of a product or service that would be purchased as a particular price
competition
the rivalry among buyers and among sellers in the same field
circular flow
the stream of funds, goods, and services passing back and forth among households, businesses, and government
economics
the study of how society uses limited resources to satisfy unlimited wants
macroeconomics
the study of the forces affecting the economy as a whole
economic system
the way a society answers the WHAT, HOW, and WHO questions
demand curve
a line on a graph that shows the number of a particular item that will be purchased at each price
supply curve
a line on a graph that shows the number of a particular item that will be sold at each price
external cost
a cost of a business that is paid for by society as a whole
internal cost
a cost of business paid for by the business firm