Lecture 1/ Chapter 1 Flashcards
Positive Statement
A statement of fact. Claims that attempt to describe the world as it is
Normative Statement
A statement of value. Claims that attempt to prescribe how the world should be
Behavioral outcomes
Efficiency
Redistributive outcomes
Equity
Scarcity
The limited nature of society’s resources
Externailty
The impact of one person’s actions on the well- being of a bystander
Equality
The property of distributing economic prosperity uniformly among the members of society
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
Inflation
An increase in the overall level of prices in the economy. When a government creates large quantities of the nation’s money, the value of the money falls.
Market Failure
A situation in which a market left on its own fails to allocate resources efficiently
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
Property Rights
The ability of an individual to own and exercise control over scarce resources
Productivity
The quantity of goods and services produced from each unit of labor input
Economics
The study of how society manages its scarce resources
