Reading...
Play button
Play button
Use LEFT and RIGHT arrow keys to navigate between flashcards;
Use UP and DOWN arrow keys to flip the card;
H to show hint;
A reads text to speech;
51 Cards in this Set
- Front
- Back
|
Scarcity
|
The limited nature of society’s resources
|
|
|
The limited nature of society’s resources
|
Scarcity
|
|
|
Economics
|
The study of how society manages its scarce resources
|
|
|
The study of how society manages its scarce resources
|
Economics
|
|
|
Efficiency
|
when society is getting the maximum benefits from its scarce resources (all resources are fully and efficiently employed)
|
|
|
when society is getting the maximum benefits from its scarce resources (all resources are fully and efficiently employed)
|
Efficiency
|
|
|
Equality
|
means that benefits are distributed uniformly among society’s members
|
|
|
means that benefits are distributed uniformly among society’s members
|
Equality
|
|
|
Opportunity cost
|
the cost incurred when an item or activity is chosen (the trade off involved in an economic decision-making process)
|
|
|
the cost incurred when an item or activity is chosen (the trade off involved in an economic decision-making process)
|
Opportunity cost
|
|
|
Rational people
|
people who systematically and purposefully do the best they can to achieve their objectives
|
|
|
people who systematically and purposefully do the best they can to achieve their objectives
|
Rational people
|
|
|
Individuals
|
how much time to work and what goods and services to buy in order to achieve their highest possible level of satisfaction
|
|
|
how much time to work and what goods and services to buy in order to achieve their highest possible level of satisfaction
|
Individuals
|
|
|
Marginal changes
|
small incremental adjustments to a plan of action (usually symbolized by a change of one unit) marginal benefit/ cost
|
|
|
small incremental adjustments to a plan of action (usually symbolized by a change of one unit) marginal benefit/ cost
|
Marginal changes
|
|
|
Incentive
|
something that induces a person to take action
|
|
|
something that induces a person take action
|
Incentive
|
|
|
David Ricardo’s comparative advantage
|
England and Portugal. Cloth and Wine.
|
|
|
Law of comparative advantage
|
the ability to produce something at a lower opportunity cost than other producers face
|
|
|
the ability to produce something at a lower opportunity cost than other producers face
|
Law of comparative advantage
|
|
|
Market Econ
|
An economy that allocated resources through the decentralized decisions of many firms and households as they interact in the market for goods and services (supply and demand dictate price)
|
|
|
An economy that allocated resources through the decentralized decisions of many firms and households as they interact in the market for goods and services (supply and demand dictate price)
|
Market Econ
|
|
|
Adam Smith
|
The Wealth of Nations (1776)
|
|
|
Mercantilism
|
market controlled by merchants
|
|
|
market controlled by merchants
|
Mercantilism
|
|
|
Property Rights
|
the ability of an individual to own and exercise control over scarce resources
|
|
|
the ability of an individual to own and exercise control over scarce resources
|
Property Rights
|
|
|
Market failure
|
a situation in which a market left on its own fails to allocate resources efficiently
|
|
|
a situation in which a market left on its own fails to allocate resources efficiently
|
Market failure
|
|
|
Externality
|
the impact of one person’s actions on the well-being of a bystander.
|
|
|
the impact of one person’s actions on the well-being of a bystander.
|
Externality
|
|
|
Market power
|
ability of a single economic actor (or small group) to have a substantial influence on market prices
|
|
|
ability of a single economic actor (or small group) to have a substantial influence on market prices
|
Market power
|
|
|
Allocation of resources
|
the government’s duty to see that everyone has a basic standard of living
|
|
|
the government’s duty to see that everyone has a basic standard of living
|
Allocation of resources
|
|
|
Productivity
|
the quality of goods and services produced from each unit of labor input. Policy makers must prepare the next generation for the future (education, technology or capital investment)
|
|
|
the quality of goods and services produced from each unit of labor input. Policy makers must prepare the next generation for the future (education, technology or capital investment)
|
Productivity
|
|
|
Firms
|
This produces goods and services (inputs, or factors of production).
|
|
|
This produces goods and services (inputs, or factors of production).
|
Firms
|
|
|
Households
|
own the factors of production and consumer goods produces by the firm.
|
|
|
own the factors of production and consumer goods produces by the firm.
|
Households
|
|
|
The households and firms interact with each other in two types of markets
|
markets for goods and services, and markets for factors of production.
|
|
|
the production possibilities frontier
|
a graph that shows the combinations of output that the economy can possibly produce given the available factors of production and the available production.
|
|
|
a graph that shows the combinations of output that the economy can possibly produce given the available factors of production and the available production.
|
the production possibilities frontier
|
|
|
Capital goods
|
The things used for production
|
|
|
The things used for production
|
Capital goods
|
|
|
Efficiency
|
when all factors of production are being used fully and efficiently (anywhere on the ppf curve).
|
|
|
when all factors of production are being used fully and efficiently (anywhere on the ppf curve).
|
Efficiency
|
|
|
Inefficiency
|
Not using the full potential for output. Not using all of the available resources
|
|
|
Not using the full potential for output. Not using all of the available resources
|
Inefficiency
|
