Econ Vocab 1

Question 1

Scarcity

Answer 1

the limited nature of society’s resources

Question 2

Economics

Answer 2

the study of how society manages it’s scarce resource

Question 3

Efficiency

Answer 3

the property of society getting the most it can from its scare resources

Question 4

Equality

Answer 4

the property of distributing economic prosperity uniformly among the members of society

Question 5

Opportunity Cost

Answer 5

whatever must be given up to obtain some item

Question 6

Rational People

Answer 6

people who systematically and purposefully do the best they can to achieve their objectives

Question 7

Marginal Change

Answer 7

A small, incremental adjustment to a plan of action

Question 8

Incentive

Answer 8

Something that induces a person to act

Question 9

Market Economy

Answer 9

an economy that allocates resources through the decentralized decisions of many firms and households as they interact in markets for goods and services

Question 10

Property Rights

Answer 10

the ability of an individual to own and exercise control over scarce resources

Question 11

Market Failure

Answer 11

a situation in which a market left on its own fails to allocate resources efficiently

Question 12

Externality

Answer 12

the impact of one person’s actions on the well-being of a bystander

Question 13

Market Power

Answer 13

the ability of a single economic actor (or small group of actors) to have substantial influence on market prices

Question 14

Productivity

Answer 14

the quantity of goods and services produced from each unit of labor input

Question 15

Inflation

Answer 15

an increase in the overall level of prices in the economy

Question 16

Business Cycle

Answer 16

fluctuations in economic activity, such as employment and production

Question 17

First Principle

Answer 17

People face trade-offs

Question 18

Second Principle

Answer 18

The cost of something is what you give up to get it

Question 19

Third Principle

Answer 19

Rational people think at the margin

Question 20

Fourth Principle

Answer 20

People respond to incentives

Question 21

Fifth Principle

Answer 21

Trade can make everyone better off

Question 22

Sixth Principle

Answer 22

Markets are usually a good way to organize economic activity

Question 23

Seventh Principle

Answer 23

Governments can sometimes improve market outcomes

Question 24

Eighth Principle

Answer 24

A country’s standard of living depends on its ability to produce goods and services

Question 25

Ninth Principle

Answer 25

Prices rise when the government prints too much money

Question 26

Tenth Principle

Answer 26

Society faces a short-run trade-off between inflation and unemployment