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20 Cards in this Set
- Front
- Back
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Scarcity
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The 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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Opportunity cost
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Whatever must be given up to obtain some item.
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efficiency
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when society is getting the maximum benefits from its scarce resources (all resources are fully and efficiently employed)
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equality
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means that benefits are distributed uniformly among society’s members
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The “guns and butter” argument
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The more a society spends on national defense to protect itself from foreign aggressors, the less it has to spend on consumer goods
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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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Individuals
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how much time to work and what goods and services to use in order to achieve their highest possible level of satisfaction
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Marginal changes
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small incremental adjustments to a plan of action (usually symbolized by a change of one unit) marginal benefit/ cost
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Incentive
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something that induces a person take action
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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 it's own fails to allocate resources efficiently
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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 unit of labor input.
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Inflation
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an 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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Law of Comparative Advantage
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the ability to produce something at a lower opportunity cost than other producers face.
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David Ricardo’s Comparative advantage
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Trade. Wine. Cloth. England. Portugal.
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