Chapter 1 key concepts Flashcards
Scarcity
The limited resources a society has
Economics
The study of how society manages its scarce resources
efficiency
How well society is at getting the most it can from its scarce resources
Equality
Distributing economic prosperity uniformly among the members of society
opportunity cost
What must be given up to obtain something else
rational people
people who systematically and purposefully do the best to achieve a objective
marginal change
An incremental adjustment to a plan of action
incentive
something that persuades a person to act
Market economy
An economy that allocates resources through many firms and households (not centralized)
Property Rights
The ability to own and exercise rights over a scarce resource
Market failure
When a market doesn’t allocate resources efficiently
Externality
The impact of one person actions on the well-being of a bystander(pollution from a firm affecting residents)
Market Power
Power of a strong influence(group or individual) to affect market prices
Productivity
Quantity of goods and services produced from each unit of labor
Inflation
an increase in overall level of prices in the economy
