UNIT 6 VOCABUARY 21-40

Demand - willingness and ability to purchase a product or service

Goods tangible products that we use to satisfy our wants and needs

Services work performed by a person for someone else

Invisible Hand - metaphor coined by Adam Smith to describe the self-regulating behavior of the marketplace. Individuals can make profit, and maximize it without the need for government intervention

Consumer - a person who purchases goods and services for personal use.

Producer - a person, company, or country that makes, grows, or supplies goods or commodities for sale.

Oligopoly - a market form in which a market or industry is dominated by a small number of sellers (oligopolists)

Monopolistic Competition - A type of competition within an industry where: 1. All firms produce similar yet not perfectly substitutable products. 2. All firms are able to enter the industry if the profits are attractive. 3. All firms are profit maximizers. 4. All firms have some market power, which means none are price takers.

Free enterprise - economic system in which individuals and businesses are allowed to compete for profit with a minimum of government interference

Economy - the study of how individuals and nations make choices about ways to use scarce resources to fulfill their needs and wants

Peak The highest point between the end of an economic expansion and the start of a contraction in a business cycle.

The stage of the economy's business cycle that marks the end of a period of declining business activity and the transition to expansion. Trough

Expansion The phase of the business cycle when the economy moves from a trough to a peak.

Contraction A phase of the business cycle in which the economy as a whole is in decline. More specifically, it occurs after the business cycle peaks, but before it becomes a trough. According to most economists, it is said to occur when a country's real GDP has declined for two or more consecutive quarters

Peak Trough Expansion Contraction Change Over Time

Microeconomics The branch of economics that analyzes the market behavior of individual consumers and firms in an attempt to understand the decision-making process of firms and households.

Macroeconomics The field of economics that studies the behavior of the aggregate economy, it examines economy-wide phenomena such as changes in unemployment, national income, rate of growth, gross domestic product, inflation and price levels.

Inflation The rate at which the general level of prices for goods and services is rising, and, subsequently, purchasing power is falling.

GDP The monetary value of all the finished goods and services produced within a country's borders in a specific time period

Unemployment It occurs when a person who is actively searching for employment is unable to find work.

Consumer Price Index A measure that examines the weighted average of prices of a basket of consumer goods and services, such as transportation, food and medical care. It is calculated by taking price changes for each item in the predetermined basket of goods and averaging them; the goods are weighted according to their importance.