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ECON summer Stack
MicroEconomics, Chapters 1-4
| Term | Definition |
|---|---|
| Trade-Off | To get one thing, we give up another |
| Opportunity Cost | the value of the next best alternative given up |
| Business Cycle | fluctuations in economic activity, such as employment and production |
| Economics | the study of how society manages its scarce resources |
| Efficiency | the property of society getting the most it can from its scarce resources |
| Equality | the property of distributing economic prosperity uniformly among the members of society |
| Externality | the uncompensated impact of one person’s actions on the well-being of a bystander |
| Incentive | something that induces a person to act |
| Inflation | an increase in the overall level of prices in the economy |
| Marginal Change | an incremental adjustment to a plan of action |
| 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 |
| Market Failure | a situation in which a market left on its own does not allocate resources efficiently |
| Market Power | the ability of a single economic actor (or small group of actors) to have a substantial influence on market prices |
| Productivity | the quantity of goods and services produced from each unit of labor |
| Property Rights: | the ability of an individual to own and exercise control over scarce resources |
| Rational People | people who systematically and purposefully do the best they can to achieve their objectives |
| Scarcity | the limited nature of society’s resources |
| Circular-flow Diagram | a visual model of the economy that shows how dollars flow through markets among households and firms. |
| Macroeconomics | the study of economy-wide phenomena, including inflation, unemployment, and economic growth. |
| Microeconomics | the study of how households and firms make decisions and how they interact in markets. |
| Normative Statements: | claims that attempt to prescribe how the world should be. |
| Positive Statements: | claims that attempt to describe the world as it is. |
| Production Possibilities Frontier: | a graph that shows the combinations of output that the economy can possibly produce with the available factors of production and production technology. |
| Absolute Advantage: | the ability to produce a good using fewer inputs than another producer does. |
| Comparative Advantage | the ability to produce a good at a lower opportunity cost than another producer. |
| Export | goods produced domestically and sold abroad. |
| Import | goods produced abroad and sold domestically. |
| Opportunity Cost | whatever must be given up to obtain some item. |
| Change in demand | |
| Change in quantity demanded | |
| Change in quantity supplied | |
| Change in supply | |
| Complements | |
| Demand schedule | |
| Excess demand( Shortage ) | |
| Excess Supply ( Surplus ) | |
| Individual Demand curve | |
| Individual Supply curve | |
| Inferior good | |
| Law of demand | |
| Law of supply | |
| Market Demand Curve | |
| Market Equilibrium | |
| Market Supply Curve | |
| Minimum supply price | |
| Normal good | |
| Perfectly competitive market | |
| Quantity demanded | |
| Quantity supplied | |
| Substitutes | |
| Supply schedule |
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