Chapter 1 Flashcards
individual choice
The decision by an individual of what to do, which necessarily involves a decision of what not to do
Resource
Anything that can be used to produce something else
Scarce
Not enough of the resources are available to satisfy all the various ways a society wants to use them
Opportunity cost
What you must give up in order to get it
the real cost of an item
trade-off
When you compare the costs with the benefits of doing something
marginal decisions
Decisions about whether to do a bit more or a bit less of an activity
Marginal amalysis
The study of marginal decisions
Incentive
Anything that offers rewards to people who change their behavior
Interaction
My choices affect your choices and vice versa
Trade
Providing goods and services to others and receive goods and services in return
Gains from trade
People can get more of what they want through trade than they could if they were self-sufficient
Specialization
Each person specializes in the task that he or she is good at performing
Equilibrium
When no individual would be better off doing something different
efficient
Taking advantage of all opportunites to make some people better off without making others worse off
Equity
Means that everyone gets his or her fair share
