micro econ Flashcards
the limited nature of
society’s resources
scarcity
the study of how society manages its scarce
resources
economics
To get something that we like,
we usually have to give up something else that we also like
Principle 1: People Face Trade-offs
the property of society
getting the most it can
from its scarce resources
efficiency
the property of distributing economic prosperity
uniformly among the
members of society
equality
whatever must be given
up to obtain some item
opportunity cost
people who systematically
and purposefully do the
best they can to achieve
their objectives
rational people
something that induces a
person to act
incentive
an economy that allocates
resources through the
decentralized decisions
of many firms and households as they interact in
markets for goods and
services
market economy
the ability of an individual to own and exercise
control over scarce
resources
property rights
an increase in the overall level of prices in the
economy
inflation
a visual model of the
economy that shows
how dollars flow through
markets among
households and firms
circular-flow diagram
a graph that shows the
combinations of output
that the economy can
possibly produce given
the available factors
of production and the
available production
technology
production possibilities
frontier
the study of how households and firms make
decisions and how they
interact in markets
microeconomics
the study of economywide phenomena,
including inflation,
unemployment, and
economic growth
macroeconomics
