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14 Cards in this Set
- Front
- Back
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What does scarcity cause people to do?
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make choices
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Define opportunity cost?
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The next best alternative use of time, money or resources
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define marginal cost
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cost associated with Producing one additional unit of something
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define monetary incentive
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When the boss pays you money or buys you something if you reach a certain goal
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Who protects private property in a market economy?
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The government
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What did Adam Smith believe about a Free Market Economy?
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That people must pursue their own self interest
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Define Adam Smith's theory of the invisible hand?
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When people pursue the own self interest it results in the lowest prices and the best goods
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Define substitute good?
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A good that people when the price is lower than the good they usually buy, Tylenol vs generic brand
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What is the law of demand?
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demand will rise when prices decrease and demand will decrease when prices increase
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What must happen in order for demand to increase?
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Buyers must be willing to buy and be able to afford it
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What happens to the price if demand is high and supply is low
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Price is high or increases
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define equilibrium price
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The price where supply and demand meet on a demand curve
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What is the result of price controls?
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demand increases and supply decreases
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Why are price ceilings instituted?
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to protect consumers
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