Ch 1-3 Flashcards

1
Q

The study of how society manages its scarce resources

A

Economics

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2
Q

When society gets the most from its scarce resources

A

Efficiency

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3
Q

When prosperity is distributed uniformly among society’s members

A

Equality

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4
Q

Whatever given up to attain something

A

Opportunity cost

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5
Q

People who systematically and purposefully do the best they can to achieve their objectives

A

Rational people

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6
Q

Incremental adjustments to an existing plan

A

Marginal changes

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7
Q

Something that induces a person to act ie the prospect of reward or punishment

A

Incentive

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8
Q

A group of buyers and sellers not necessarily in the same location

A

Market

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9
Q

Allocates resources through the decentralized decisions of many households and firms as they interact in markets

A

Market economy

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10
Q

Invisible hand

A

Price

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11
Q

When the market fails to allocate society’s resources efficiently

A

Market failure

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12
Q

When the production or consumption of a good affects bystanders ie pollution

A

Externalities

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13
Q

A single buyer or seller has substantial influence on market price ie monopoly

A

Market power

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14
Q

The most important determinant of living standards, the amount of goods and services produced per unit of labor

A

Productivity

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15
Q

Increase in the general level of prices

A

Inflation

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16
Q

The resources the economy uses to produce goods and services including labor land and capital

A

Factors of production

17
Q

The study of how households and firms make decisions and how they interact in markets

A

Microeconomics

18
Q

Study of the economy-wide phenomenons including inflation, unemployment, and economic growth

A

Macroeconomics

19
Q

Attempt to describe the world as it is, can be refuted or confirmed

A

Positive statement

20
Q

Attempt to prescribe how the world should be, can’t be refuted or confirmed

A

Normative statement

21
Q

Trade can make everyone better off

A

Interdependence

22
Q

Goods produced domestically and sold abroad

A

Exports

23
Q

Goods produced abroad and sold domestically

A

Imports

24
Q

The ability to produce a good using fewer inputs than another producer

A

Absolute advantage

25
Q

The ability to produce a good at a lower opportunity cost than another producer

A

Comparative advantage

26
Q

The limited nature of society’s resources

A

Scarcity