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21 Cards in this Set
- Front
- Back
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choice
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a selection among alternative goods, services, or actions
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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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comparative advantage
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a situation in which a group or country can produce one good at a lower opportunity cost than another person or country
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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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economic interactions
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exchanges of goods and services between people
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economics
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the study of how people deal with scarcity
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freely determined prices
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a price that is determined by the individuals and firms interacting in markets
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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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government failure
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a situation in which the government makes things worse than the market, even though there may be market failure
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incentive
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a device that motivates people to take action, usually so as to increase economic efficiency
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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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international trade
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the exchange of goods and services between people or firms in different nations
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market
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an arrangement by which economic exchanges between people take place
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market economy
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an economy characterized by freely determined prices and the free exchange of goods and services in markets
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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 there is a potential role for government
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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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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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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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property rights
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rights over the use, sale, and proceeds from a good or resource
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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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specialization
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a concentration of production effort into a single specific task
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