Limited quantities of resources to meet unlimited wants

Limited quantities of resources to meet unlimited wantsScarcityA situation in which a good or service is unavailableShortageAny human-made resource that is used to create other goods and servicesCapitalAll human-made goods that are used to produce other goods and services; tools and buildingsPhysical capitalThe skills and knowledge gained by a worker through education and experienceHuman capitalThe most desirable alternative given up as the result of a decisionOpportunity costLevel of economic prosperityStandard of livingEconomic system that relies on habit, custom, or ritual to decide questions of production and consumption of goods and servicesTraditional economyEconomic system in which decisions on production and consumption of goods and services are based on voluntary exchange in marketsMarket economyEconomic system in which the central government makes all decisions on the production and consumption of goods and servicesCentrally planned economyEconomic system in which the central authority is in command of the economy; a centrally planned economyCommand economyMarket-based economic system with limited government involvementMixed economyThe struggle among producers for the dollars of consumerscompetitionTerm economist use to describe the self-regulating nature of the marketplaceInvisible handThe power of consumers to decide what gets producedConsumer sovereigntyA social and political philosophy based on the belief that democratic means should be used to evenly distribute wealth throughout a societySocialismA political system characterized by a centrally planned economy with all economic and political power resting in the hands of the central governmentcommunismThe doctrine that states that government generally should not intervene in the marketplaceLaissez faireProperty owned by individuals or companies, not by the government of the people as a wholePrivate propertyThe desire to own something and the ability to pay for itdemandConsumers buy more of a good when its prince decreases and less when its price increasesLaw of demandThe change in consumption resulting from a change in real incomeIncome effectA good that consumers demand less of when their incomes increaseInferior goodTwo goods that are bought and used togethercomplementsGoods used in place of one anothersubstitutesDescribes demand that is not very sensitive to a change in priceinelasticDescribes demand that is very sensitive to a change in priceelasticThe amount of goods abailablesupplyTendency of suppliers to offer more of a good at a higher priceLaw of supplyThe amount a supplier is willing and able to supply at a certain priceQuantity suppliedA measure of the way quantity supplied reacts to a change in priceElasticity of supplyThe change in output from hiring one additional unity of laborMarginal product of laborA level of production in which the marginal product of labor increases as the number of workers increasesIncreasing marginal returnsA cost that does not change, no matter how much of a good is producedFixed costThe cost of producing one more unit of a goodMarginal costThe cost of operating a facility, such as a store or factoryOperating costA government payment that supports a business of marketsubsidyGovernment intervention in a market that affects the production of a goodregulationThe point at which quantity demanded and quantity supplied are equalequilibriumWhen quantity demanded is more than quantity suppliedExcess demandWhen quantity supplied is more than quantity demandedExcess supplyA maximum price that can be legally charged for a good or servicePrice ceilingA minimum price for a good or servicePrice floorA price ceiling placed on rentRent controlSituation in which quantity supplied is greater than quantity demanded; also known as excess supplysurplusSituation in which quantity demanded is greater than quantity supplied; also known as excess demandshortageA sudden shortage of a goodSupply shockA system of allocating scarce goods and services using criteria other than pricerationingLaw in a city or town that designates separate areas for residency and for businessZoning lawThe legally bound obligation to pay debtsliabilityPayment other than wages of salariesFringe benefitA partnership agreementArticles of partnershipAct ordering common ownership interests, profit and loss sharing, and shared management responsibilities in a partnershipUniform Partnership Act (UPAPartnership in which partners share equally in both responsibility and liabilityGeneral paartnershipPartnership in which only one partner is required to be a general partnerLimited partnershipPartnership in which all partners are limited partnersLimited liability partnership (LLP)Money and other valuables belonging to an individual or businessassetsA legal entity owned by individual stockholderscorporationA certificate of ownership in a corporationstockCorporation that issues stock to only a few people, often family membersClosely held corporationCorporation that sells stock on the open marketPublicly held corporationA formal contract to repay borrowed money with interest at fixed intervalsbondThe combination of two or more firms competing in the same market with the same good or serviceHorizontal mergerThe combination of two or more firms involved in the difference stages of producing the same good or serviceVertical mergerBusiness combination merging more than three businesses that make unrelated productsconglomerateLarge corporation that produces and sells its goods and services throughout the worldMultinational corporation (MNC)