Midterm Review Flashcards
When the federal government crafts environmental policies that make it less expensive for firms to follow green initiatives…
The policies are consistent with economic incentives
What is the study of the choices people make to attain their goals given their scarce resources?
Economics
Economists use the word marginal to mean an extra or additional benefit or cost of a decision. An optimal decision occurs when…
Marginal benefit equals marginal cost
A market is a ____ of a good or service and the institution or arrangement by which they come together to trade
Buyers and sellers
What does it take to make a rational decision?
Using all available information and weighed all known benefits and costs
One of the basic facts of life that people must make choices as they try to attain their goals. This unavoidable fact comes from a reality an economist calls…
Scarcity
What is a centrally planned economy?
The government decides how economic resources will be allocated
What is a market economy?
The decisions of households and firms interacting in markets to allocate economic resources
What is productive efficiency?
A good or service is produced at the lowest possible cost
What is allocative efficiency?
Production is in accordance with consumer preferences
What is equity?
The fair distribution of economic benefits
What is a mixed economy?
An economy in which most economic decisions result from the interaction of buyers and sellers in markets but the government plays a significant role in the allocation of resources
What is opportunity cost?
The highest valued alternative that must be given up to engage in an activity
What do trade-offs cause us to ask about economic decisions?
What goods and services will be produced? How will they be produced? Who will receive the goods and services?
Who decides what goods and services will be produced?
Consumers, firms, and government
