Economics Final Exam (2023/2024) 100% Pass

Economics Final Exam (2023/2024) 100% Pass Economics the study of how people seek to satisfy their needs and wants by making choices Horizontal Merger the combination of two or more firms competing in the same market with the same good or service Vertical Merger the combination of two or more firms involved in different stages of producing the same good or service Shortage a situation in which a good or service is unavailable Scarcity limited quantities of resources to meet unlimited wants Factors of Production land, labor, and capital; the three groups of resources that are used to make all goods and services Entrepreneur ambitious leader who combines land, labor, and capital to create and market new goods or services Trade-Off the alternative we sacrifice when we make a decision Opportunity Cost the most desirable alternative given up as the result of a decision Human Capital the skills and knowledge gained by a worker through education and experience Physical Capital all human-made goods that are used to produce other goods and services; tools and buildings Thinking at the Margin deciding whether to do or use one additional unit of some resource Production Possibility Graph a graph that shows alternative ways to use an economy's resources Production Possibility Frontier the line on a production possibilities graph that shows the maximum possible output for a specific economy Adam Smith classic economist that believed the market could regulate itself Classical Economics the idea that free markets can regulate themselves Free Market individuals and privately owned businesses own the factors of production and therefore, make what they want and buy what they want Command Economy economic system in which the central government makes all of the decisions on the production and consumption of goods and services Mixed Economy economic system that combines tradition and free market with limited government involvement Natural Monopoly a market that runs most efficiently when one large firm supplies all of the output Perfect Competition a market structure in which a large number of firms all produce the same product Monopolistic Competition a market structure in which many companies sell products that are similar but not identical Non-price Competition a way to attract customers through style, service, or location, but not a lower price Cartel a formal organization of producers that agree to coordinate prices and production Sherman Anti-Trust Act law that outlawed mergers and monopolies that limit trade between states Clayton Anti-Trust Act law that outlawed practices that limit competition or lead to monopoly Sole Proprietorship a business owned and managed by a single individual General Partnership partnership in which partners share equally in both responsibility and liability Limited Partnership partnership in which only one partner is required to be a general partner Corporation a legal entity owned by individual stockholders Law of Demand economic law that states that consumers buy more of a good when its price decreases and less when its price increases Law of Supply tendency of suppliers to offer more of a good at a higher price Equilibrium the point at which quantity demanded and quantity supplied are equal Normal Goods a good that consumers demand more of when their incomes increase Inferior Goods a good that consumers demand less of when their income increases Elasticity of Supply a measure of the way quantity supplied reacts to a change in price Elasticity of Demand a measure of how consumers react to a change in price Import Restrictions restrictions imposed by a country that affect the supply of a good or service Price Ceiling a maximum price that can legally charged for a good or service Price Floor a minimum price for a good or service Rationing a system of allocating scarce goods and services using criteria other than price Skilled Labor labor that required specialized skills and education Semi-skilled Labor labor that requires minimal specialized skills and education Unskilled Labor labor that requires no specialized skills, education, or training Collective Bargaining the process in which union and company representatives meet to negotiate a new labor contract Labor Union an organization of workers that tries to improve working conditions, wages, and benefits for its members Wagner Act 1935, also National Labor Relations Act; granted rights to unions; allowed collective bargaining Price the high value or worth of something Law of Diminishing Marginal Utility a general decrease in the utility of a product, as more units of it are consumed Tax a required payment to a local, state, or national government Proportional Tax a tax for which the percentage of income paid in taxes remains the same for all income levels Progressive Tax a tax for which the percentage of income paid in taxes increases as income increases Regressive Tax a tax for which the percentage of income paid in taxes decreases as income increases Characteristics of a Good Tax simplicity, efficiency, certainty, and equity Federal Income Tax a payroll deduction collected by employers by law and sent to the federal government to support governmental programs FICA taxes that fund Social Security and Medicare Medicaid entitlement program that benefits low-income families, some people with disabilities, and elderly people in nursing homes Medicare a national health insurance program that helps pay for health care for people over age 65 or with certain disabilities Representative Money objects that have value because the holder can exchange them for something else of value Functions of money medium of exchange, unit of account, and store of value FDIC the government agency that insures customer deposits if a bank fails Financial Intermediary institution that helps channel funds from savers to borrowers Investment the act of redirecting resources from being consumed today so that they may create benefits in the future Diversification spreading out investments to reduce risk Fiat Money money that has value because the government has ordered that it is an acceptable means to pay debts Stock a share representing a portion of ownership in a corporation Dow Jones Average averages 65 stocks in 3 different catagories to see how the market is doing