Chapter 1 - Ten Principles of Economics Flashcards
Opportunity cost
Whatever must be given up to obtain some item
Efficiency
The property of society getting the most it can from its scarce resources
Business cycle
Fluctuations in economic activity, such as employment and production
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 fails to allocate resources efficiently
Scarcity
The limited nature of society’s resources
Economics
The study of how society manages its scarce resources
Productivity
The quantity of goods and services produced from each unit of labor input
Equality
The property of distributing economics prosperity uniformly among the members of society
Market power
The ability of a single economic actor (or small group of actors) to have a substantial influence on market prices
Inflation
An increase in the other all level of prices in the economy
Externality
The impact of one persons actions on the well-being of a bystander
Marginal change
A small incremental adjustment to a plan of action
Incentive
Something that induces a person to act
Rational people
People who systematically do the best they can to achieve their objectives
Market economy
An economy that allocates resources through the decentralized decisions of many firms and households as they interact in markets for goods and services
