Krugman Textbook Chapter 1 Flashcards
Individual Choice
The decision a person makes based on what to do and what not to do.
Resource
Anything, such as land, labour, or capital that can be used to produce something else.
Scarce
When there is not enough of a resource to meet societies demands for it.
Opportunity Cost
The real cost of an item; what one must give up to get it.
Trade-Off
Comparing the cost and benefits when doing something.
Marginal Decisions
Deciding whether to do more or less of an activity while doing it.
Marginal Analysis
The study of marginal decisions.
Incentive
A reward for people who change their behaviour.
Interaction
The effect of one individuals choices upon another.
Trade
In a market economy, this is when individuals provide goods and services to others to receive goods and services in return.
Gains from Trade
The additional benefits you would get from trading as opposed to trying to be self sufficient.
Specialization
When a person takes the skill(s) that he or she are good at and furthers them through practice.
Equilibrium
An economic situation where no individual would be better off doing something different.
Efficient
Taking all opportunities to make some people better off without making others worse off.
Equity
Attempting to create a fair situation for everyone.
