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34 Cards in this Set

  • Front
  • Back
the study of how society manages its scarce resources.
the property of society getting the most it can from its scarce resources.
the property of distributing economic prosperity fairly among the members of society.
Opportunity Cost
whatever must be given up to obtain some item.
Rational People
people who systematically and purposefully do the best they can to achieve their objectives.
Marginal Changes
small incremental adjustments to a plan of action.
something that induces a person to act.
Market Economy
an economy that allocates resources through the
decentralized decisions of many firms and households as they interact in markets for goods andservices.
Property Rights
the ability of an individual to own and exercise control over scarce resources.
Market Failure
a situation in which a market left on its own fails to Allocate resources efficiently.
the impact of one person’s actions on the wellbeing of a bystander.
Market Power
the ability of a single economic actor to have a substantial influence on market prices.
the quantity of goods and services produced from each hour of a worker’s time.
an increase in the overall level of prices in the economy.
Business Cycle
fluctuations in economic activity, such as employment and production.
Principle 1
People Face Trade-offs
Principle 2
The Cost of Something is What Your Give Up to Get It
Principle 3
Rational People Think at the Margin
Principle 4
People Respond to Incentives
Principle 5
Trade Can Make Everyone Better Off
Principle 6
Markets Are Usually a Good Way to Organize Economic Activity
Principle 7
Governments Can Sometimes Improve Market Outcomes
Principle 8
A Country’s Standard of Living Depends on Its Ability to Produce Goods and Services
Principle 9
Prices Rise When the Government Prints Too Much Money
Principle 10
Society Faces a Short-Run Trade-off between Inflation and Unemployment
the study of how households and firms make decisions and how they interact in markets.
the study of economy wide phenomena, including inflation, unemployment, and economic growth.
Positive Statements
claims that attempt to describe the world as it is.
Normative Statements
claims that attempt to prescribe how the world should be.
Absolute Advantage
the ability to produce a good using fewer inputs than another producer.
Opportunity Cost
whatever must be given up to obtain some item.
Comparative Advantage
the ability to produce a good at a lower opportunity cost than another producer.
goods produced abroad and sold domestically.
goods produced domestically and sold abroad.