Economics and Personal Finance Final Exam

Adam smith - ANSWERS-author of wealth of nations and known as the father of economics capital goods - ANSWERS-any tangible assets that an organization uses to produce goods or services such as office buildings, equipment, and machinery Capital Resources - ANSWERS-equipment, machines, tools, , infrastructure, factories, computers, copy machines, forklifts, heavy equipment, and trucks command economies - ANSWERS-the government or other central authority is in command consumer sovereignty - ANSWERS-the concept that consumers rule. In order to succeed, businesses must produce goods and services that consumers are willing and able to buy cooperative - ANSWERS-Benefits: member owned Costs: decision making is slow because the members are making them corporation - ANSWERS-Benefits: they can afford to make large scale investments Costs: expensive because of taxes and regulations Cost - ANSWERS-the value of the next best alternative other than the choice that was made Dividend - ANSWERS-A sum of money paid regularly by a company to its shareholders out of its profits Economics - ANSWERS-the study of how individuals and societies make choices under the condition of scarcity elasticity - ANSWERS-refers to the response of consumers and suppliers to the changes in price. It is equal to the percentages change in quantity divided by the percentage change in price elasticity of supply and demand - ANSWERS-The more elastic supply or demand, the more responsive consumers and producers are to price changes. The more inelastic supply or demand, the less responsive producers are to price changes. entrepreneurs - ANSWERS-those who take calculated risks in order to start new businesses and who develop innovative products and processes equilibrium - ANSWERS-the state of the world where economic forces are balanced and values of economic variables will not change Equity - ANSWERS-The value of the shares issued by a company Factors of Production - ANSWERS-things used to make goods or services firms - ANSWERS-any business entity, such as sole proprietorships, partnerships, corporations, limited liability companies, franchises, or cooperatives franchise - ANSWERS-Benefits: they gain exclusive rights to sell and benefit from products Costs: strict guidelines and regulations, limited products, and high franchise fees households - ANSWERS-refer to the people or group of people that live together and make economic decisions for private use how the interaction of supply and demand determine equilibrium price - ANSWERS-The amount made and the amount sold need to be even to equal equilibrium. When more is made then sold, they have a surplus. When more is needed then is made, they have a shortage. When they have a shortage, the prices rise, while when they have a surplus, prices plummet. human capital - ANSWERS-the skills, abilities, and ideas learned over time in preparation for a job and while on the job incentives - ANSWERS-a thing or idea that is used to encourage or discourage people from making certain decisions or behaving in a certain way Labor or Human Resources - ANSWERS-physical and mental capabilities of individuals used in the production of goods and services Land or Natural Resources - ANSWERS-all types of natural resources (physical land, timber, water, oil, minerals, and plants) law of demand - ANSWERS-states that people will buy more of a good or service at lower prices and less at higher prices, if everything else remains the same law of supply - ANSWERS-states that producers will increase the quantity supplied at higher prices and decrease the quantity supplied at lower prices, if everything else remains the same laws of supply and demand - ANSWERS-It shows that the amount of a good of service supplied directly effects the price Macroeconomics - ANSWERS-the study of the economy as a whole Marginal benefit - ANSWERS-the additional benefit ( or change in total benefit ) resulting from an action marginal cost - ANSWERS-can be understood as the cost of each additional unit of a good. market economy - ANSWERS-an economy in which consumers decide what will be produced by purchasing what they prefer, producers choose the most profitable method of production, and goods and services are consumed by those who are willing and able to pay the market maximize satisfaction - ANSWERS-when consumers analyze their choices based on the income they count on and decide what is the best combination of goods they can afford Microeconomics - ANSWERS-the study of how individuals, households, and businesses make choices mixed economies - ANSWERS-a combination of all or some of the other economies partnership - ANSWERS-Benefits: owners make decisions and keep profits Costs: limited resources, and the owners might have conflict price ceilings - ANSWERS-the highest allowed price for a good or service price floors - ANSWERS-limits imposed by government or a group on what is the lowest price that can be charged for a product. For them to be effective, they must be greater than the equilibrium price price system - ANSWERS-component of any economic system that uses prices expressed in any form of money for the valuation and distribution of goods and services and the factors of production private ownership - ANSWERS-the concept that individuals are allowed to own property and use it in any legal way they see fit purposes and implications of price ceilings and price floors - ANSWERS-they make sure that the prices stay low enough for people to buy the goods and services revenue - ANSWERS-the income generated by the sale of goods and services role of an entrepreneur - ANSWERS-take financial risks in order to order money; increase competition in economy Scarcity - ANSWERS-a condition that exists when there are not enough resources to satisfy all of the competing uses sole proprietorship - ANSWERS-Benefits: owner makes all decisions keeps profit Costs: limited resources, and if the company fails, if will affect the owners personal assets