Chapter 1 Flashcards
Efficiency
Society or a person getting the most out of its scarce resources.
Equity
making sure people get what they need to be on equal footing.
Opportunity Cost
Whatever must be given up to obtain an item
Rational people
People who do the best they can to achieve their objectives
Marginal Changes
Small incremental adjustments to a plan of action
Incentive
Something that induces or gets somebody to do something and/or act
True or False: Trade can make both countries better off?
True!
What does trade allow countries to do with their resources?
Allows countries to specialize in what they do best and have a variety of goods
Market Economy
A system where prices and production are controlled by supply and demand, not by the government.
Property Rights
The ability for someone to own and have control over their resources
Market Failure
A situation where a market left on its own fails to allocate resources efficiently
Externality
The impacts of a person actions on a bystanders well being
Market Power
The ability for a single economic actor to have influence on the markets prices
Productivity
the quantity of goods and services produced from each hour of a worker’s time
Inflation
An increase in the overall prices in the economy
