Chpt 1: Economics Foundation and Models Flashcards
Allocative Efficiency
occurs when production is in accordance with consumer preferences.
Productive Efficiency
occurs when a good or service is produced at the lowest possible cost.
Market Economy
An Economy in which the decisions of households and firms as they interact in markets determine the allocation of economic resources
Centrally Planned Economy
An Economy in which the government decides how economic resources will be allocated
Economic Models
A simplified version of reality used to analyze real-world economic situations
Economic Variable
Something measurable that can have different values, such as the number of people employed in manufacturing
Economics
The study of the choices people make to attain their goals, given their scarce resources
Equity
The fair distribution of economic benefits
Macroeconomics
The study if the economy as a whole including topics such as inflation, unemployment, and economic growth
Marginal analysis
Analysis that involves comparing marginal benefits and marginal costs
Market
A group of buyers and sellers of a good or service and the institution or arrangement by which they come together to trader
Microeconomics
The study of how the government attempts to influence their choices
Mixed Economy
An economy in which most economic decisions results from the interaction o buyes a
Normative Analysis
Analysis concerned with what ought to be
Opportunity Coast
The highest-valued alternative that must be given to engage in an activity
