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32 Cards in this Set
- Front
- Back
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Economics |
Study of scarcity and choice. |
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Economy |
A system for coordinating a society's productive and consumptive activities. |
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Market Economy |
Decisions of individual producers and consumers largely determine what, how, and for whom to produce, with little government involvement in the decisions |
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Command Economy |
Industry is publicly owned and a central authority makes production and consumption decisions. |
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Incentives |
Rewards or punishments that motivate particular choices |
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Marginal Analysis |
Study of costs and benefits of doing a little bit more of an activity versus a little bit less |
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Land |
All resources that came from nature (minerals, timber, petroleum) |
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Labor |
Effort of workers |
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Capital |
Refers to manufactured goods used to make other goods and services |
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Entrepreneurship |
describes the efforts of entrepreneurs in organizing resources for production, taking risks to create new enterprises, and innovating to develop new products and production processes. |
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Opportunity Cost |
What you must give up in order to get it |
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Positive Economics |
Branch of economic analysis that describes the way the economy actually works |
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Normative Economics |
Makes predictions about the way the economy should work |
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Trade-off |
When you give up something in order to have something else |
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Efficient |
A situation where there is no way to make anyone better off without making at least one person worse off |
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Productive efficiency |
When an economy produces at a point on its production possibilities curve |
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Allocative Efficiency |
when an economy produces at the point along its production possibilities curve that makes consumers as well off as possible. |
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Trade |
Value of mutually beneficial transactions |
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Specialization |
Focusing on a task that a person is good at performing |
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Comparative advantage |
Having a lower opportunity costs for producing a good or service |
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Absolute advantage |
being able to produce more of a good or service than others in a given time with given resources |
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Substitutes |
A rise in the price of a good leads to an increase in the demand for another good |
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Complements |
A rise in the price of one good leads to a decreased demand for another good |
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Normal good |
A rise in income results in an increase in demand for a good or service |
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Inferior good |
A rise in income results in a decrease in demand for a good or service |
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Equilibrium |
Intersection of supply and demand |
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Surplus |
Result of a price floor |
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Shortage |
Result of a price ceiling |
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Price ceiling |
Maximum price that buyers are required to pay for a good or service |
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Quota |
An upper limit on the quantity of some good that can be bought or sold |
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License |
Gives its owner the right to supply a good or service |
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Deadweight loss |
value of foregone mutually beneficial transactions |
