 | Term | Definition |
| |
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 distributing economic prosperity fairly among the members of a 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 acheive 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 goods and services |
| |
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 wellbeing of a bystander |
| |
market power |
the ability of a single economic actor (or small group of actors) to have a substantial influence on market prices |
| |
property rights |
the ability of an individual to own and excercise control over scarce resources |
| |
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 |
fluctuation 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 possibility fronteir (PPF) |
a graph that shows 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 |
| Add or remove terms from this set |
