Principles Of Economics Flashcards
What are the 7 principles of Economics
- People face tradeoffs
- People respond to incentives
- Rational people think at the margin
- The cost of what you give up to get something.
- Trade can make everyone better off.
- Markets are usually a good way to organise economic activity.
- The government can sometimes improve market outcomes
What is Productivity
Productivity is the quantity of goods and services produced from each hour of a worker’s time.
What is Opportunity Cost
Opportunity cost is the cost of something that a person has to give up to attain something else
What is Efficiency
Efficiency is the property of a society getting out of its scarce resources from an efficient allocation of resources to no waste.
What is Equity
Equity is the property of distributing economic prosperity fairly among the members of the society.
What is Market Failure
Market failure is a situation in which a market has failed on its own to allocate resources efficiently
What is Market Power
Market power is the ability of a single economic actor or a small group of people to have substantial influences on market prices.
What is Externality
Externality is the impact of one’s actions on the well-being of a bystander
What is Inflation
Inflation is an increase in the overall level of market prices in the economy.
What is a Business Cycle
The business cycle is a cycle of fluctuations in the Gross Domestic Product (GDP) around its long-term natural growth rate
