AP Microeconomics: Chapter 1
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16 terms
Terms | Definitions |
|---|---|
Scarcity | the limited nature of society's resources. |
Economics | the study of how society manages its scarce resources. |
Efficiency | the property of society getting the most it can from its scarce resources. |
Equity | the property of distribution economic prosperity fairly among the members of society. |
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. |
Incentives | 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 goods and services. |
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 quantity of goods and services produced from each hour of a worker's time. |
Inflation | an increase in the overall level of prices in the economy. |
Business cycle | fluctuations in economic activity, such as employment and production. |
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