Economic Vocabulary By:Arline Benitez

Externality: a side effect or consequence of an industrial or commercial activity that affects other parties without this being reflected in the cost of the goods or services involved, such as the pollination of surrounding crops by bees kept for honey

Sentence: The externality of selling hot cheetoes would gain a amazing amount of money.

Scarcity: is the fundamental economic problem of having seemingly unlimited human wants in a world of limited resources. It states that society has insufficient productive resources to fulfill all human wants and needs

Sentence: Unfortunately,air is unlimited but H2O is scarce.

Economic Perspective: focuses on how resources are distributed in an organizational setting. Philosophies that stem from the economic perspective concentrate on leveraging or manipulating those resources.

Sentence: If you inflate your prices, through an economic perspective things would look better.

Rational Self Interest: the principle that an action is rational if and only if it maximizes one's self-interest. The view is a normative form of egoism.

It is in your rational self interest to sell what you want to sell at your store.

Opportunity Cost: the loss of potential gain from other alternatives when one alternative is chosen.

If disney land keeps raising their prices, their opportunity cost would be devastating because no one will go.

Marginal Cost: the cost added by producing one additional unit of a product or service

The marginal cost decreases if the company Nike makes more shoes.

Marginal Benefit: is the additional satisfaction or utility that a person receives from consuming an additional unit of a good or service. A person's marginal benefit is the maximum amount he is willing to pay to consume that additional unit of a good or service

The marginal benefit if addidas lowering their prices is a greater amount of sale.

Marginal analysis is an examination of the additional benefits of an activity compared to the additional costs incurred by that same activity. Companies use marginal analysis as a decision-making tool to help them maximize their potential profits.

Those who work on wall street have a good sense of marginal analysis when looking at stats.

Utility: the state of being useful, profitable, or beneficial.

The utility in solar power is much more useful then power plants.

Incentive: a thing that motivates or encourages one to do something

The incentive of buying a happy meal is a toy they give you.

Monetary Incentive: is a money-based reward given when an employee meets or exceeds expectations. Monetary incentives can include cash bonuses, stock options, profit-sharing and any other type of reward that increases an employee's compensation.

Adiddas met monetary incentive when the yeezys sold out.

Non-Monetary: reward can consist of almost any material object such as jewelry, precious metals or an automobile for example. In business, a non-monetary reward can also be a service such as improvements made on a property or repairs done on a car.

A non Monetary example would be to buy a kia, this is because it is a clean air vehicle.

Supply: make (something needed or wanted) available to someone; provide.

Supply and demand is necessary in economics.

Demand: an insistent and peremptory request, made as if by right.

There is a demand in toilet paper because everyone goes number 2.

Economics: the branch of knowledge concerned with the production, consumption, and transfer of wealth

Economics helps people better understand how money is used and distributed around the world.

Market: a regular gathering of people for the purchase and sale of provisions, livestock, and other commodities.

Marketing skills are essential for having a succesful business.

Public Good: a commodity or service that is provided without profit to all members of a society, either by the government or a private individual or organization.

A public good the government provides us is with healthcare service.

Private Cost : A producer's or supplier's cost of providing goods or services. It includes internal costs incurred for inputs, labor, rent, and depreciation but excludes external costs incurred as environmental damage (unless the producer or supplier is liable to pay for them).

The private cost of buying a home is very expensive.

External costs: An external costs occurs when producing or consuming a good or service imposes a cost upon a third party. If there are external costs in consuming a good (negative externalities), the social cost will be greater than the private cost.

The external cost of buying a vehicle is getting car insurance.

Private Benefit: is derived from the requirement under section 501(c)(3) of the Internal Revenue Code that an organization be organized exclusively and operated primarily for one or more qualifying exempt purposes

The private benefit of being in sales are commission.

External Benefit occurs when producing or consuming a good causes a benefit to a third party. The existence of external benefits (positive externalities) means that social benefit will be greater than private benefit.

The external benefit of scion selling its cars is Toyota gaining money as well.

Traditional economy is an original economic system in which traditions, customs, and beliefs help shape the goods and the services the economy produces, as well as the rules and manner of their distribution. Countries that use this type of economic system are often rural and farm-based.

Sentence: Many countries have a traditional economy

Command Economy: an economy in which production, investment, prices, and incomes are determined centrally by a government.
Market Economy is an economic system in which economic decisions and the pricing of goods and services are guided solely by the aggregate interactions of a country's individual citizens and businesses. There is little government intervention or central planning.

Sentence: In swap meets they have a market economy because they determine how much everything is and can lower the price whenever.

Mixed Economy: an economic system combining private and public enterprise

Sentence: In a mixed economy both the market and government make decisions to determine which goods and services.

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