Term
| centrally planned economy |
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Definition
| economy where government decides how economic resources will be allocated |
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| simplified versions of reality used to analyze real-world economic situations |
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| something measurable that can have different values, such as wages of software programmers |
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| study of the choices people make to attain their goals, given their scarce resources |
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| fair distribution of economic benefits |
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| study of economy as a whole, including topics such as inflation, unemployment, and economic growth |
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| analysis involving comparing marginal benefits and marginal costs |
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| group of buyers and sellers of good/service and the institution or arrangement by which they come together to trade |
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| economy where decisions of households and firms interacting in markets allocate economic resources |
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| study of how households and firms make choices, how they interact in markets, and how the gov attempts to influence their choices |
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| economy where economic decisions result from the interaction of buyers and sellers in markets, but in which the gov plays a significant role in allocation of resources |
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| analysis concerned with what ought to be |
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| analysis concerned with what is |
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| situation where good/service is produced at lowest possible cost |
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| situation where unlimited wants exceed the limited resources available to fulfill those wants |
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| idea that because of scarcity, producing more of one good/service means producing less of another good/service |
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| situation that occurs in markets when both the buyer and seller of a product are made better off by the transaction |
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| firm owned by single individual and not organized as a corporation |
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| firm owned jointly by 2 or more persons and not organized as a corporation |
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| legal form of business that provides the owners w/ limited liability |
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| anything of value owned by person or a firm |
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| legal provision that shields owners of a corporation from losing more than they have invested in the firm |
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| the way in which a corporation is structured and the impact a corporation's structure has on the firm's behavior |
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| separation of ownership from control |
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| in many large corporations the top management, rather than the shareholders, control day-to-day operations |
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| a problem caused by an agent pursuing his own interests rather than the interests of the principal who hired him |
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flow of funds from savers to borrowers through financial intermediaries such as banks.
Intermediaries raise funds from savers to lend to firms (and ot borrowers) |
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Definition
| flow of funds from savers to firms through financial markets |
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| financial security that represents a promise to repay a fixed amount of funds |
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| interest payment on a bond |
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| the cost of borrowing funds, usually expressed as a % of the amount borrowed |
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| financial security that represents partial ownership of a firm |
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| payments by a corporation to its shareholders |
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| anything owed by a person/firm |
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| a financial statement that sums up a firm's revenues, costs, and profit over a period of time |
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| firm's net income measured by revenue less operating expenses and taxes paid |
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| the highest-valued alternative that must be given up to engage in an activity |
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| cost that involves spending money |
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| nonmonetary opportunty cost |
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| firm's revenues minus all of its costs, implicit and explicit |
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| financial statement that sums up a firm's financial position on a particular day, usually the end of a quarter or a yr |
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