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26 Cards in this Set

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  • Back
Scarcity
The limited nature of society's resources
Economics
The study of how society managges its scarce resources.
Efficiency
The property of society getting the most it can from its scarce resources.
Equity
the property of distributing economic prosperity fairly among the members of socity
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
incentive
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 good and servces
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
externality
the impact of one person's actions on the well being of a bystander
market power
the ability of a single economic actor (or small group of actors) to have a substantial influence on market price
productivity
the quantiy of good and services produced from ach hour of a workers time
inflation
an increase in the overall level of prices in the economy
buisness cycle
fluctuations in economic activity, such as employment and production.
Circular flow diagram
a visual model of the economy that shows how dollars flow through markets among households and firms.
Production Possibilities Frontier
a graph that the combinations of output that the economy can possibly produce given the available factors of production and the available production technology
microeconomics
the study of how households and firms make decisions and how they interact in markets
macroeconomics
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 then another producer
comparitive advantage
the ability to produce a good at a lower opportunity cost then another producer
imports
goods produced abroad and sold domestically
exports
goods produced domestically and sold aborad