Chapter 1 Key Concepts Flashcards
Scarcity
Limited nature of society’s resources
Economics
Study of how society manages its scarce resources
Efficiency
The property of society getting the most it can from its scarce resources
Equality
Distributing economic prosperity uniformly among the members of society
Opportunity cost
Whatever must be given up to obtain some new item
Rational people
Ppl who systematically and purposefully do the best they can to achieve their objectives
Marginal change
An incremental adjustment to a plan of action
Incentive
Something that induces a person to act
Market economy
An economy that allocated resources through the decentralized decisions of many firms and households as they interact in markets for goods and services
Property rights
The ability of an individual to own and exercise control over scarce resources
Market failure
A situation in which a market left on its own does not allocate resources efficiently
Externality
The impact of one person’s actions on the well being of a bystander
Market power
The ability of a single economics actor of have a substantial influence on market prices
Productivity
The quantity of goods and services produced from each unit of labor input
Inflation
An increase in the overall level of prices in the economy
