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26 Cards in this Set
- Front
- Back
scarcity
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limited nature of society's resources
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economics
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the study of how society manages its scarce resources
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efficiency
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the property of society getting the most it can from its scarce resources
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equity
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the property of distributing economic prosperity fairly among the members of society
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opportunity cost
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whatever must be given to obtain some item
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rational people
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people who systematically and purposefully do the best they can to achieve their objectives
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marginal changes
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small incremental adjustments to a plan of action
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incentive
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something that induces a person to act
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market economy
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an economy that allocates resources through the decentralized decisions of many firms and households as they interact in markets for goods and services
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property rights
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the ability of an individual to own and exercise control over scarce resources
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market failure
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a situation in which a market left on its own fails to allocate resources efficently
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externality
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the impact of one person's actions on the well-being of a bystander
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market power
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the ability of a single economic actor (or small group of actors) to have a substantial influence on market prices
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productivity
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the quantity of goods and services produced from each hour of a worker's time
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inflation
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am increase in the overall level of prices in the economy
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business cycle
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fluctuations in economic activity, such as employment and production
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circular flow diagram
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a visual model of the economy that shows how dollars flow through markets among households and firms
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production possibilities frontier
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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
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microeconomics
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the study of how households and firms make decisions and how they interact in markets
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macroeconomics
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the study of economy-wide phenomena, including inflation, unemployment, and economic growth
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positive statements
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claims that attempt to describe the world as it is
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normative statements
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claims that attempt to describe how the world should be
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comparative advantage
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-comparison among producers of a good according to their opportunity cost
-impossible for one person to have CA in both goods -smaller opportunity cost has comp, adv |
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absolute advantage
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-comparison among producers of a good according to productivity
-producer requiring smaller inputs to produce a good has absolute advantage in that good |
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imports
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goods/services produced abroad and sold domestically
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exports
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goods/services produced domestically and sold abroad
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