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.