General Economics/Glossary

Authoritarian: describes a form of government that limits individual freedoms and requires strict obedience from its citizens. Black market: where items are sold illegally. Centrally planed economy: an economic system in which the government makes all decisions on the three key economic questions. Command economy: another name for a centrally planned economy. Communism: a political system in which the government owns and controls all resources and means of production and makes all economic decisions. Disequilibrium: when a price or quantity is not at equilibrium; when quantity supplied is not balanced by the quantity demanded in a market. Economic System: how an economy distributes goods and services. Efficiency: Maximum resources used for the output of goods and services. Equilibrium: when the demand for a good or service is balanced by the supply of that good or service. Factor Payments: the money you get from doing a job. Fad: something that's popular for a very short time. Innovation: bringing new things into the world. Inventory: it's the amount of stuff that a producer has on hand. Law of increasing cost: Production shifts from one good or service to more and more resources. Market - A place where people go to buy things where people sell them. Minimum wage: minimum price an employer can pay a worker for one hour of work. Price ceiling : the legal maximum price the government can charge for a good or service. Price floor: minimum price for a service or good Product possibilities curve: A graph that shows an alternative way to use the economies productive resources. Production Possibilities frontier: A line on a the production possibilities curve that shows the maximum amount possible output an economy is able to produce. Profit: how much money a company makes after it raises more than it spends. Rent control : the legal maximum price set by the government that are placed on apartment rents to prevent inflation. Shortage: when there is not enough of a good or service to be supplied to everyone who demands it. Socialism: a range of the economic and political system based on the belief that wealth should be distributed evenly throughout society. Specialization - To focus on certain plans with a certain amount of time. Standard of Living: how well you are able to live on what you are making. Surplus : there are more supplies than there are demanded therefore causing the price of a good to increase and be more than the equilibrium price. Underutilization: A point inside the production possibilities frontier that indicates the use of fewer resources.