Glossary Terms:

What Happened to Railroads?

Glossary terms from:


Any activity or organization that produces or exchanges goods or services for a profit.


A secret agreement between firms to fix prices or engage in other activities to restrict competition in an industry; illegal in the United States.


Attempts by two or more individuals or organizations to acquire the same goods, services, or productive and financial resources. Consumers compete with other consumers for goods and services. Producers compete with other producers for sales to consumers.


Paying interest on the principal and on interest already earned. For example, if someone deposits $2,000 in an account that pays interest at 8 percent, he or she will earn $160 in interest after one year, for a balance of $2,160. If the depositor leaves this sum in the account for another year, however, he or she will earn $172.80 in interest because the 8 percent rate will apply to the new balance of $2,160, not the original $2,000 deposit. The longer the money is left in the account, the more dramatic the compounding effect.


People who use goods and services to satisfy their personal needs and not for resale or in the production of other goods and services.


A legal entity owned by shareholders whose liability for the firm's losses is limited to the value of the stock they own.


An amount that must be paid or spent to buy or obtain something. The effort, loss or sacrifice necessary to achieve or obtain something.


The quantity of a good or service that buyers are willing and able to buy at all possible prices during a period of time.


A severe, prolonged economic contraction.


Trading a good or service for another good or service, or for money.


Tangible objects that satisfy economic wants.


Payments earned by households for selling or renting their productive resources. May include salaries, wages, interest and dividends.

Market Economy

An economy that relies on a system of interdependent market prices to allocate goods, services, and productive resources and to coordinate the diverse plans of consumers and producers, all of them pursuing their own self-interest.

Market Failures

The systematic overproduction or underproduction of some goods and services that occurs when producers or consumers do not have to bear the full costs of transactions they undertake. Usually related to externalities or the need for public goods.


Places, institutions or technological arrangements where or by means of which goods or services are exchanged. Also, the set of all sale and purchase transactions that affect the price of some good or service.


Anything that is generally accepted as final payment for goods and services; serves as a medium of exchange, a store of value and a standard of value. Characteristics of money are portability, stability in value, uniformity, durability and acceptance.


Exclusive privilege or control over a service/commodity in a specific market.


A market structure in which there is a single supplier of a good or service. Also, a firm that is the single supplier of a good or service for which there are no close substitutes; also known as a monopolist.


The amount of money that people pay when they buy a good or service; the amount they receive when they sell a good or service.

Price Discrimination

Charging different customers different prices for the same good or service.


People and firms that use resources to make goods and services.


A process of manufacturing, growing, designing, or otherwise using productive resources to create goods or services used to to satisfy a want.


Economic regulation is the prescription of price and output for a specific industry, often a natural monopoly. Social regulation is the prescription of health, safety, performance, environmental, output and job standards across several industries.


The basic kinds of resources used to produce goods and services: land or natural resources, human resources (including labor and entrepreneurship), and capital.


Earnings from an investment, usually expressed as an annual percentage.


Activities performed by people, firms or government agencies to satisfy economic wants.


An ownership share or shares of ownership in a corporation.


The amount of a good or service that producers are willing and able to offer for sale at each possible price during a given period of time. Normally, as the price of a good or service rises (or falls), the quantity supplied of the good or service rises (or falls).


Compulsory payments to governments by households and businesses.


The exchange of goods and services for money or other goods and services.


Effort applied to achieve a purpose or result, often for pay; skills and knowledge put to use to get something done; employment at a job or in a position; occupation, profession, business, trade, craft, etc.


People employed to do work, producing goods and services.