Chapter 1

the limited nature of a society's resources

the study of how a society manages its scarce resources

the property of society getting the most it can from its scarce resources

the property of distributing economic prosperity fairly among the members of society

whatever must be given up to obgain some item

small incrementL adjustments to a plan of action

an economy that allocates resources through the decentralized decisions of many firms and households as they interact in markets for goods and services

• -a situation in which a market left on its own fails to allocate resources efficiently
• -externality, market power

the impact of one person's actions on the well-being of a bystander

the ability of a single economic actor or a small group of actors to have a substantial influence on market prices

the quantity of goods and services produced from each hour of a worker's time

an increase in the ocerall level of prices in the economy

a curve that shows the short-run tradeoff between inflation and unemployment

fluctuations in economic activity, such as employment and production