Microeconomics: Chapter 1

Front 1

Allocative Efficiency

Back 1

Production is in accordance w/ consumers preferred every good or service is produced up to a point where the last unit provides a marginal benefit to society equal to the marginal cost of production.

Front 2

centrally planned economy

Back 2

an economically government approach in which government decides how economic resources will be allocated.

Front 3

economic variable

Back 3

something measurable that can have different values, such as the incomes of doctors. `

Front 4

economic model

Back 4

simplified versions of reality used to analyze real- world economic situations.

Front 5

economics

Back 5

the study of choices people make to attain their goals, given their scarce resources.

Front 6

equity

Back 6

fair distribution of economic benefits.

Front 7

macroeconomics

Back 7

study of the economy as a whole, individual topics such as inflation, unemployment, and economic growth.

Front 8

marginal analysis

Back 8

analysis that involves comparing marginal benefits and marginal costs.

Front 9

market

Back 9

a group of buyers and sellers of good or services and the institution or arrangement by which they come together to trade.

Front 10

market economy

Back 10

economy in which the decisions of households and firms interacting in markets allocate economic resources.

Front 11

microeconomics

Back 11

study of how households and firms make choices how they interact in markets and how the government attempts to influence their choices.

Front 12

mixed economy

Back 12

economy in which most decisions result from the interaction of buyers and sellers in markets, but in which the government plays a significant role in the allocation of resources.

Front 13

normative analysis

Back 13

what ought to be

Front 14

opportunity cost

Back 14

the highers valued alternative that must be given up to engage in an activity.

Front 15

positive analysis

Back 15

what is

Front 16

scarcity

Back 16

unlimited wants exceed the limited resources available to fulfill those wants

Front 17

productive efficiency

Back 17

goods or services produced at the lowest price.

Front 18

trade-off

Back 18

An idea that because of scarcity, producing more of one good or service means producing less of another good or service.

Front 19

voluntary exchange

Back 19

both buyer and seller of a product are made better off by the transaction.