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23 Cards in this Set
- Front
- Back
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Economics
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The study of how people deal with scarcity.
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Scarcity
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The situation in which the quantity of resources is insufficient to meet all wants.
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Choice
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A selection among alternative goods, services, or actions.
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Economic Interactions
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Exchanges of goods and services between people.
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Market
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An arrangement by which economic exchanges between people take place.
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Opportunity Cost
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The value of the next-best forgone alternative that was not chosen because something else was chosen.
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Gains from Trade
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Improvements in income, production, or satisfaction owing to the exchange of goods or services.
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Specialization
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A concentration of production effort on a single specific task.
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Division of Labor
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The division of production into various parts in which different groups of workers specialize.
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Comparative Advantage
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A situation in which a person or group can produce one good at a lower opportunity cost than another person or group.
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International Trade
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The exchange of goods and services between people or firms in different nations.
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Production Possibilities
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Alternative combinations of production of various goods that are possible, given the economy’s resources.
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Increasing Opportunity Cost
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A situation in which producing more of one good requires giving up an increasing amount of production of another good.
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Production Possibilities Curve
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A curve showing the maximum combinations of production of two goods that are possible, given the economy’s resources.
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Market Economy
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An economy characterized by freely determined prices and the freee exchange of goods and services in markets.
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Command Economy
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An economy in which the government determines prices and production; also called a centrally planned economy.
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Freely Determined Prices
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Prices that are determined by the individuals and firms interacting in markets.
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Property Rights
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Rights over the use, sale, and proceeds from a good or resource.
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Incentive
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A device that motivates people to take action, usually to increase economic efficiency.
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Market Failure
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Any situation in which the market does not lead to an efficient economic outcome and in which the government has a potential role.
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Government Failure
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The situation in which the government fails to improve on the market or even makes things worse.
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Financial Crises
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Disruptions to financial markets which make it difficult for people and business firms to borrow and obtain loans.
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Recession
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A decline in production and employment that lasts for six months or more.
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