Chapter 1 Flashcards
Equity
Means that everyone gets his/her “fair” share, what’s fair is up to the beholder
Efficient
If it takes all opportunities to make some people better off without making others worse off
Equilibrium
When no individual would be better off doing something different
Gains from trade
Ppl can get more of what they want through trade than they could if they tried to be self sufficient
Incentive
An opportunity to make themselves better off
Ex/ “coupon”
Marginal analysis
The study of marginal decisions
Marginal decisions
Decisions about whether to do a bit more or a bit less of an activity
Trade-offs
When you compare the costs with the benefits of doing something
Opportunity cost
What you must give up in order to get an item you want
Scarce
When there’s not enough of the resource available to satisfy all the ways society wants to use it
Resource
Anything that can be used to produce something else
“Ingredient”
Individual choice
Decisions by an individual about what to do and what not to do
Economic growth
The growing ability of the economy to produce goods and services
MacroEconomics
Concerned more with the overall ups and downs of economy
Market failure
When pursuing self-interest leaves society worse off
