Micro chapter 1 Flashcards
Incentive
A reward or punishment
Rational People
Individuals who make the best choices based on goals
Market economy
Resources priced by demand
Property Rights
The right to own any good
Externality
How one persons actions affects others
What is an example of externality?
Company dumping waste in the river
-therefore it affects drinking water and kids cannot swim in a river
Who decides the price of a good in a market economy?
Consumer
Market Failure
Market that fails to distribute resources efficiently
Equality
Resources that are distributed equally
Scarcity
Economy has limited resources
How is scarcity applied?
When people cannot have all the goods they want
What is an example of a business cycle?
A recession due to less jobs being available
Efficiency
Resources that are used to its fullest potential
What is an example of productivity
Most productive I take 5 shots of vodka in 20 minutes
If I take 4 shots I am not reaching my fullest potential
Trade off
giving up one thing for the other
Business Cycle
The movement in economic activity
What is an example of market failure?
When the government prices items instead of the consumer (cigarettes)
Market Power
When a firm or person influences market prices
Inflation
When prices increase in an economy
Productivity
What you produce given the amount of work
Opportunity cost
Cost of what you give up
What is an example of market power?
Monopoly
Economics
Study of how an economy manages scarcity
Name 3 items that have property rights
My IPAD
Land I own
An idea that I own
