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microeconomics t1
micro ch 1-4 vocab
Question | Answer |
---|---|
Scarcity | Limited resources and unlimited wants |
Economics | Study of how society manages its scarce resources |
Efficiency | The property of society getting the most from its scarce resources |
Efficiency | Getting maximum output from the resources available |
Efficiency | The property of a resource allocation of maximizing the total surplus received by all members of society |
Equality | The property of distributing economic prosperity uniformly among society's members |
Equality | The property of distributing prosperity uniformly among the members of society |
Opportunity cost | Whatever is given up to get something else |
Opportunity cost | Whatever is given up to get something else |
Opportunity cost | Whatever is given up to obtain some item |
Marginal changes | Incremental adjustments to an existing plan |
Incentive | Something that induces a person to act |
Market economy | An economic system where interaction of households and firms in markets determines the allocation of resources |
Property rights | The ability of an individual to own and exercise control over scarce resources |
Property rights | The ability of people to exercise control over their resources |
Market failure | A situation in which the market fails to allocate resources efficiently |
Market failure | The inability of some unregulated markets to allocate resources efficiently |
Externality | When one person's actions have an impact on a bystander |
Externality | The uncompensated impact of one person's actions on the well-being of a bystander |
Externality | When the actions of one person affect the well-being of a bystander |
Market power | The ability of an individual or group to substantially influence market prices |
Productivity | The amount of goods and services produced from each unit of labor input |
Productivity | The quantity of goods and services produced from each unit of labor input |
Inflation | An increase in the overall level of prices |
Inflation | The rate at which prices are rising |
Inflation | An increase in the overall level of prices |
Business cycle | Fluctuations in economic activity |
rational people | people who systematically and purposefully do the best they can to achieve their objectives |
Circular-flow diagram | A diagram of the economy that shows the flow of goods and services, factors of production, and monetary payments between households and firms |
Production possibilities frontier | A graph that shows the combinations of output the economy can possibly produce given the available factors of production and the available production technology |
Macroeconomics | The study of economy-wide phenomena |
Microeconomics | The study of how households and firms make decisions and how they interact in markets |
Positive statements | Descriptions of the world as it is |
Normative statements | Prescription for how the world ought to be |
Absolute advantage | The ability to produce a good using fewer inputs than another producer |
Comparative advantage | The ability to produce a good at a lower opportunity cost than another producer |
Market | A group of buyers and sellers of a particular good or service |
Competitive market | A market in which there are many buyers and sellers so that each has a negligible impact on the market price |
Quantity demanded | The amount of a good that buyers are willing and able to purchase |
Law of demand | The claim that, other things equal, the quantity demanded of a good falls when the price of the good rises |
Demand schedule | A table that shows the relationship between the price of a good and the quantity demanded |
Demand curve | A graph of the relationship between the price of a good and the quantity demanded |
Normal good | A good for which, other things equal, an increase in income leads to an increase in demand |
Inferior good | A good for which, other things equal, an increase in income leads to a decrease in demand |
Substitutes | Two goods for which an increase in the price of one leads to an increase in the demand for the other |
Complements | Two goods for which an increase in the price of one leads to a decrease in the demand for the other |
Quantity supplied | The amount of a good that sellers are willing and able to sell |
Law of supply | The claim that, other things equal, the quantity supplied of a good rises when the price of the good rises |
Supply schedule | A table that shows the relationship between the price of a good and the quantity supplied |
Supply curve | A graph of the relationship between the price of a good and the quantity supplied |
Equilibrium | A situation in which the price has reached the level where quantity supplied equals quantity demanded |
Equilibrium price | The price that balances quantity supplied and quantity demanded |
Equilibrium quantity | The quantity supplied and the quantity demanded at the equilibrium price |
Surplus | A situation in which quantity supplied is greater than quantity demanded |
Shortage | A situation in which quantity demanded is greater than quantity supplied |
Law of supply and demand | The claim that the price of any good adjusts to bring the quantity supplied and quantity demanded for that good into balance |