Econ unit 1 Vocab

The property of distributing economic prosperity
uniformly among society’s members

A situation in which the market fails to allocateresources efficiently

Limited resources and unlimited wants

The amount of goods and services produced from
each unit of labor input

The case in which there is only one seller in the
market

The principle that self-interested market
participants may unknowingly maximize the
welfare of society as a whole

The property of society getting the most from its
scarce resources

An economic system where interaction of
households and firms in markets determines the
allocation of resources

Fluctuations in economic activity

When one person’s actions have an impact on a
bystander

An increase in the overall level of prices

An incremental adjustment to an existing plan

Study of how society manages its scarce resources

Whatever is given up to get something else

The ability of an individual or group to
substantially influence market prices

Something that induces a person to act

The ability of an individual to own and exercise
control over scarce resources

Systematically and purposefully doing the best you
can to achieve your objectives

Inputs such as land, labor, and capital

The study of economy-wide phenomena

Objective development and testing of
theories

Whatever is given up to get something
else

Prescription for how the world ought to
be

Getting maximum output from the
resources available

Descriptions of the world as it is

Simplifi cations of reality based on
assumptions

A graph that shows the combinations of
output the economy can possibly produce
given the available factors of production
and the available production technology

The study of how households and fi rmsmake decisions and how they interact inmarkets

A diagram of the economy that shows
the fl ow of goods and services, factors
of production, and monetary payments
between households and fi rms

Whatever is given up to obtain some item

The ability to produce a good at a lower
opportunity cost than another producer

Goods produced domestically and sold abroad

Goods produced abroad and sold domestically

The ability to produce a good using fewer
inputs than another producer

The increase in total production due to
specialization allowed by trade