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48 Cards in this Set

  • Front
  • Back
fluctuations in economic activity, such as employment and production
business cycle
the study of how society manages its scarce resources
economics
the property of society getting the most it can from its scarce resources
efficiency
the property of distributing economic prosperity
equity
the impact of one person's actions on the well-being of a bystander
externality
something that induces a person to act
incentive
an increase in the overall level of prices in the economy
inflation
small incremental adjustments to a plan of action
marginal changes
an economy that allocates resources through the decentralized decisions of many firms and households as they interact in markets for goods and services
market economy
a situation in which a market left on its own fails to allocate resources efficiently
market failure
the ability of a single economic actor (or small group of actors) to have a substantial influence on market prices
market power
whatever must be given up to obtain some item
opportunity cost
the quantity of goods and services produced from each hour of a worker's time
productivity
the ability of an individual to own and exercise control over scarce resources
property rights
people who systematically and purposefully do the best they can to achieve their objectives
rational people
the limited nature of society's resources
scarcity
a visual model of the economy that shows how dollars flow through markets among households and firms
circular-flow diagram
the study of economy wide phenomena, including inflation, unemployment, and economic growth
macroeconomics
the study of how households and firms make decisions and how they interact in markets
microeconomics
claims that attempt to prescribe how the world should be
normative statements
claims that attempt to describe the world as it is
positive statements
a graph that shows the combinations of output that the economy can possibly produce given the available factors of production and the available production technology
production possibilities frontier
the ability to produce a good using fewer inputs than another producer
absolute advantage
the ability to produce a good at a lower opportunity cost than another producer
comparative advantage
goods produced domestically and sold abroad
exports
goods produced abroad and sold domestically
imports
whatever must be given up to obtain some item
opportunity cost
a market in which there are many buyers and many sellers so that each has a negligible impact on the market price
competitive market
two goods for which an increase in the price of one leads to a decrease in the demand for the other
complements
a graph of the relationship between the price of a good and the quantity demanded
demand curve
a table that shows the relationship between the price of a good and the quantity demanded
demand schedule
a situation in which the market price has reached the level at which quantity supplied equals quantity demanded
equilibrium
the price that balances quantity supplied and quantity demanded
equilibrium price
the quantity supplied and the quantity demanded at the equilibrium price
equilibrium quantity
a good fow which, other things equal, and increase in income leads to a decrease in demand
inferior good
the claim that, other things equal, the quantity demanded of a good falls when the price of the good rises
law of demand
the claim that, other things equal, the quantity supplied of a good rises when the price of the good rises
law of supply
the claim that the price of any good adjusts to bring the quantity supplied and the quantity demanded for that good into balance
law of supply and demand
a group of buyers and seller of a particular good or service
market
a good for which, other things equal, and increase in income leads to an increase in demand
normal good
the amount of a good that buyers are willing and able to purchase
quantity demanded
the amount of a good that sellers are willing and able to sell
quantity supplied
a situation in which quantity demanded is greater than quantity supplied
shortage
two goods for which an increase in the price of one leads to an increase in the demand for the other
substitutes
a graph of the relationship between the price of a good and the quantity supplied
supply curve
a table that shows the relationship between the price of a good nd the quantity supplied
supply curve
a table that shows the relationship between the price of a good and the quantity supplied
supply schedule
a situation in which quantity supplied is greater than quantity demanded
surplus