Chapter 1 Ten Principles Of Economics Flashcards
Incentive
Something that induces a person to act
Market economy
Am economy that allocates resources through the decentralized decisions of many firms and households as they interact I’m markets for.goods and services
Market failure
Situation in which a market left on its own fails to allocate resources efficiently
Efficiency
The property of a resource allocation of maximizing the total surprise received by all members of society
Opportunity cost
Whatever must be given up to obtain some item
Market power
The ability of a single economic actor (or small group of actors) to have a substantial influence on market prices
Marginal changes
Small incremental adjustments to a plan of action
Business cycle
Fluctuations in economic activity, such as employment and production
Rational people
Those who systematically and purposefully do the best they can to achieve their objectives
Scarcity
The limited nature of society’s resources
Inflation
An increase in the overall level prices in the economy
Equity
The fairness of the distribution in well-being among the members of society
Productivity
The quantity of goods and services produce from each hour of a worker’s time
Property rights
The ability of an individual to own and exercise control over scarce resources
Externality
The impact of one person’s action on the well-being of a bystander
