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26 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 managges 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 socity
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Opportunity cost
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whatever must be given up 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 good and servces
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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 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 price
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productivity
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the quantiy of good and services produced from ach hour of a workers time
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inflation
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an increase in the overall level of prices in the economy
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buisness 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 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 prescribe how the world should be
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absolute advantage
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the ability to produce a good using fewer inputs then another producer
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comparitive advantage
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the ability to produce a good at a lower opportunity cost then another producer
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imports
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goods produced abroad and sold domestically
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exports
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goods produced domestically and sold aborad
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