Economics and Personal Finance Vocab

fundamental economic problem of meeting people's virtually unlimited needs and wants with scarce resources

social science dealing with how people satisfy seemingly unlimited and competing needs and wants with the careful use of scarce resources

basic requirement for survival, including food, clothing, and shelter

something we would like to have but is not necessary for survival

tangible economic product that is useful, transferable to others, and used to satisfy wants and needs

goods that lasts for at least three years when used regularly

goods intended for final use by consumers other than businesses

items that wears out, is used up, or lasts for fewer than three years when used regularly

tools, equipment, or other manufactured goods used to produce other goods and services

a factor of production service work or labor performed for someone; economic product that includes haircuts, home repairs, and forms of entertainment

a factor of production service work or labor performed for someone

apparent contradiction between the high value of a nonessential item and the low value of an essential item

ability or capacity of a good or service to be useful and give satisfaction to someone

sum of tangible economic goods that are scarce, useful, and transferable from one person to another

monetary value of all final goods, services, and structures produced within a country's national borders during a one-year period

economic system in which the allocation of scarce resources and other economic activity is the result of ritual, habit, or custom

organized way a society provides for the wants and needs of its people

economic system characterized by a central authority that makes most of the major economic decisions

economic system in which government owns some factors of production and has a role in deciding what and how goods are produced

meeting place or arrangement through which buyers and sellers interact to determine price and quantity of an economic product; may be local, regional, national, or global

economic system in which supply, demand, and the price system help people allocate resources and make the WHAT, HOW, and FOR WHOM to produce decisions; same as free enterprise economy

economic system in which private citizens own and use the factors of production in order to generate profits

diagram representing all possible combinations of goods and/or services an economy can produce when all productive resources are fully employed

all goods and factors of production in an economy are distributed or allocated to their most valuable uses

the advantage of gaining each additional unit of an economic good

the cost of gaining each additional unit of an economic good

what satisfaction of needs/wants (utility) is gained when consuming each additional unit of an economic good

costs calculated in terms of money (out of pocket costs)

opportunity costs of a decision (foregone benefits) that is not defined in terms of money

group that channels savings to investors; includes banks, insurance companies, savings and loan associations, and credit unions

the dollars that become available for investors to use when others save

made for the use of borrowed money; usually paid at periodic intervals for long term bonds or loans

the price of credit to a borrower

privately owned, publicly controlled, central bank of the United States

the U.S. government institution that provides deposit insurance on the depositor's account

nonprofit service cooperative that accepts deposits, makes loans, and provides other financial services

account whose funds can be removed from a bank or other financial institution by writing a check or using a debit card

persons or institutions to whom money is owed

something of value that a borrower lets the lender claim if a loan is not repaid

a loan that is backed up by collateral

a loan guaranteed only by a promise to repay it

combination of desire, ability, and willingness to buy a product

branch of economic theory that deals with behavior and decision making by small units such as individuals and firms

listing showing the quantity demanded at all possible prices that might prevail in the market at a given time

something that motivates

graph showing the quantity demanded at every possible price that might prevail in the market at a given time

rule stating that more will be demanded at lower prices and less at higher prices; inverse relationship between price and quantity demanded

the demand curve that shows the quantities demanded by everyone who is interested in purchasing a product at all possible prices

satisfaction or usefulness obtained from acquiring one more unit of a product

movement along the demand curve showing that a different quantity is purchased in response to a change in price

that portion of a change in quantity demanded caused by a change in a consumer's income when the price of a product changes

the portion of a change in quantity demanded caused by a change in price that makes other products more or less costly

consumer demand for different amounts at every price, causing the demand curve to shift to the left or the right

competing products that can be used in place of one another; products related in such a way that an increase in the price of one increases the demand for the other complements - products that increase the use of other products; products related in such a way that an increase in the price of one reduces the demand for both

amount of a product offered for sale at all possible prices in a market at a given point in time

principle that more will be offered for sale at high prices than at lower prices

a graph that shows the quantities supplied at each and every possible price in the market

the supply curve that shows the quantities offered at various prices by all firms that sell the product in a given market

amount offered for sale at a given price; point on the supply curve

change in amount offered for sale in response to a price change; movement along the supply curve

different amounts offered for sale at each and every possible price in the market; shift of the supply curve

government payment to encourage or protect a certain economic activity

responsiveness of quantity supplied to a change in price

the monetary value of a product

system of allocating goods and services without prices

simplified version of a complex concept or behavior expressed in the form of a graph, figure, equation, or diagram

the price where quantity supplied equals quantity demanded

the quantity of output supplied that is exactly equal to the quantity demanded at the equilibrium price

situation where quantity supplied is greater than quantity demanded at a given price

decrease in satisfaction or usefulness as additional units of a product are acquired

products that increase the use of other products; products related in such a way that an increase in the price of one reduces the demand for both

a table showing the quantities produced or offered for sale at each and every possible price in the market at a given point in time

situation where quantity supplied is less than quantity demanded at a given price

market classification according to number and size of firms, type of product, and type of competition; nature and degree of competition among firms in the same industry

theoretical market structure characterized by a large number of well-informed, independent buyers and sellers who exchange identical products and have freedom of entry and exit

market structure having all conditions of pure competition except for identical products; a form of imperfect competition

real or imagined differences between competing products in the same industry

competition based on a product's appearance, quality, or design, rather than its price

market structure in which a few large sellers dominate and have the ability to affect prices in the industry; form of imperfect competition

illegal agreement among producers to fix prices, limit output, or divide markets

illegal agreement by firms to charge a uniform price for a product

market structure characterized by a single producer; form of imperfect competition laissez-faire - philosophy that government should not interfere with business activity

market structure in which average costs of production are lowest when all output is produced by a single firm

market structure in which a firm has a monopoly because of its location or the small size of the market

market structure in which a firm has a monopoly because it owns or controls a manufacturing method, process, or other scientific advantage

monopoly created and/or owned by the government

a theoretical market structure that requires three conditions: very large numbers of buyers and sellers, identical products, and freedom of entry and exit industry group of firms producing similar or identical products

philosophy that government should not interfere with business activity

dollar value of all finished goods, services, and structures produced within a country's national borders during a one-year period

products that are components of other final products already included in the GDP; for example, new tires and radios for use on new cars

sales of used goods; category of activity not included in GDP computation

economic activity not taking place in the market, and therefore, not included in GDP; examples include services of homemakers and work done around the home

unreported legal and illegal activities that do not show up in GDP statistics

gross domestic product after adjustments for inflation; same as GDP in constant dollars

gross domestic product on a per person basis

the market value of goods and services produced by labor and property supplied by U.S. residents net national product

systematic changes in real GDP marked by alternating periods of expansion and contraction

changes in real GDP marked by alternating periods of expansion and contraction that occur on an irregular basis

decline in real GDP lasting at least two quarters or more

point in time when real GDP stops expanding and begins to decline