Economic Equity

the fairness with which an economy distributes its resources and wealth

Economic System

A society's way of coordinating the production and consumption of goods and services.

Traditional Economy 

An economic system in which decisions about production and consumption are based on custom and tradition.

Command Economy

An economic system in which decisions about production and consumption are made by a powerful ruler or government.

Market Economy

An economic system in which economic decisions are left up to individual producers and consumers

Factor Payment

Income earned when an individual sells or rents a factor of production that he or she own.  Wages are factor payments made to workers in exchange for their labor.

Mixed Economy

An economic system in which both the government and individuals play important roles in production and consumption.  Most modern economies are mixed economies.

Free Enterprise System

An economic system in which the means of production are mostly privately owned and operated for profit.

Economic Freedom

The abiltity to make our own economic decisions without interference from the government.

Full Employment

 Full employment exists when all who want work can find jobs.

Economic Security

A society that seeks to provide for its less fortunate members by supporting them with food, shelter, and health care to live decently.

Economic Growth

An economy that produces more and better goods and services that leads to an imporved standard of living.

Economic Stability

Goods and services we count on- they are available when we need them.

Free Market Economy

The workings of the market are not planned or directed- no one business or government agency- tells producers and consumers what to do.

Circular Flow Model

An illustration that shows the interactions in the flow of money coming into and going out of the market.

Household

A person or group of people living together

Firm

An organization that uses factors to make and sell goods or services.

Product Market

A market in which goods and services are sold by firms and puchased by household

Factor Market

A market in which households sell their land, labor, and capital to firms.

Industrial Revolution

A rapid growth of market economies beginning in the 1700's in Europe.

Capitalists

Individual investors in companies

Capitalism

Another term for free market economic system

Socialism

A political and economic philosophy that calls for property to be owned by society as a whole, rather than individuals, for the benefit of all

(Karl Marx and Friedrich Engels)

Communism

A Political and economic system in which all property and wealth are owned by all members of a society-class diffeences disappear.

(final phase of Marx/Engels plan)

Economic Planning

 In a command economy, economists, production experts, and political officials attempt to perform the functions of a market.

Public Works

Goods and services that markets do not always provide such as highways, water treatment, and sewer systems.

Laisse-Faire

Market economy that is free from government intervention.

ECONOMICS

The study of how people choose to use their limited resources to satisfy their unlimited wants

ECONOMY

A system used to manage limited resourses for the production, distribution, and consumption of goods and services

Positive Economics

The branch of economics that uses objective analysis to find out how the world works.  The goal is to describe how thinks are.

Normative Economics

The branch of economics that applies value judgements to data in order to recommend actions or policies.  The goal is to advise how things ought to be done.

Scarcity

The condition that results because people have limited resources but unlimited wants.

Tradeoff

The exchange of one benefit or advantage for another that is thought to be better.

Cost Benefit Analysis

A way to compare the costs of an action with the benefits of that action.  If benefits exceed costs, then the action is worth taking.

Incentive

Any factor that encourages or motivates a person to do something.  Prices, taxes, and laws create incentives that influence how people behave.

Economic Enigmas

Puzzles or riddles that might be explained through an economic analysis.

Enigma

Obscure or hard to understand

Resource

Anything used to produce an economic good or service.

Microeconomics

Economic decisions made by individuals, households, and businesses.

Macroeconomics

Economics focusing on the working of the economy as a whole.

Scarcity-Forces Tradeoffs Principle

Limited resrouces force people to make choices and face tradeoffs- also known as the "no free lunch principle"- every choice, even a free lunch, involves tradeoffs.

Costs

What you spend in money, time, and effort or other sacrifices

Benefits

What you gain from something in terms of money, experience, or other improvements in your situation. 

Costs Versus Benefits Principle

People choose something when the benefits of doing so are greter than the cost.

Market

Any arrangement that brings buyers and seller together to do business with each other.

Market Coordinate Trade Principle

Markets usually do better than anyone or anything else at coordinating exchanges between buyers and sellers.

Future Consequences Count Principle

Decisions made today have consequences not only for tody but in the future.

Scientific Method

Posing a question, developing a hypothesis, conducting studies, gathering information, analyzing information, and evaluating the hypothesis

Data

Factual information

Graph

Visual representation between 2 given sets of data

Variable

Quantity or data can vary or change

Axis

Each of the 2 perpendicular lines of a co-ordinate system- X axis is the horizontal line- Y axis is the vertical line.

Curve

Any line representing data points plotted on a graph- it doesn't have to be curved.

Rational Behavior Model

A tool for understading human behavior- people make decisions in ways that serve their own interests without taking into account the well being of others.

Economic Model

A simplified representation of reality that allows economists to focus on the efforts on one change at a time.  It can be an equation, computer program, diagram, or witten description.