1. Economics
    the study of how society manages its scarce resources
  2. Scarcity
    the limited nature of society's resources
  3. Efficiency
    the property of society getting the most it can from its scarce resources
  4. Equality
    the property of distrubuting economic prosperity uniformly among the members of society
  5. Opportunity Cost
    whatever must be given ip to obtain some item
  6. Rational People
    people who systematically and purposefully do the best they can to acheive their objectives
  7. Marginal Changes
    small incremental adjustments to a plan of action
  8. Incentive
    something that induces a person to act
  9. Markey Economy
    an economy that allocates resouces through the decntralized decisions of many firms and households as they interact in markets for good and services
  10. Property Rights
    the ability of an individual to own and exercise control over scarce resources
  11. Market Failure
    a situation in which a market left on its own fails to allocate resouces efficiently
  12. Externality
    the impact of one person's actions on the wellbeing of a bystander
  13. Market Power
    the ability of a singe economic actor (or small group of actors) to have a substantial influence on market prices
  14. Productivity
    the quantity of goods and services produced from each unit of labor input
  15. Inflation
    an increase in the overall level of prices in the ecomony
  16. Business Cycle
    fluctuations in economic activity, such as employment and production
  17. Circular-flow Diagram
    a visual model of the economy that shows how dollars flow through markets among households and firms
  18. Microeconomics
    the study of how households and firms make decisions and how they interact in markets
  19. Macroeconomics
    the study of economy-wide phenomena, including inflation, unemployment, and economic growth
  20. Production Possibilities Frontier
    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.
  21. Positive statements
    claims that attempt to describe the world as it is
  22. Normative Statements
    claims that attempt to prescribe how the would shoud be
  23. Absolute Advantage
    the ability to produce a good using fewer inputs than another producer
  24. Comparitive Advantage
    the ability to produce a good at a lower opportunity cost (whatever given up) than another producer
  25. Imports
    goods produced abroad and sold domestically
  26. Exports
    goods produced domestically and sold abroad
Card Set
Definitions Chs 1-4