Micro chapter 1 Flashcards Preview

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Flashcards in Micro chapter 1 Deck (24):
1

Incentive

A reward or punishment

2

Rational People

Individuals who make the best choices based on goals

3

Market economy

Resources priced by demand

4

Property Rights

The right to own any good

5

Externality

How one persons actions affects others

6

What is an example of externality?

Company dumping waste in the river
-therefore it affects drinking water and kids cannot swim in a river

7

Who decides the price of a good in a market economy?

Consumer

8

Market Failure

Market that fails to distribute resources efficiently

9

Equality

Resources that are distributed equally

10

Scarcity

Economy has limited resources

11

How is scarcity applied?

When people cannot have all the goods they want

12

What is an example of a business cycle?

A recession due to less jobs being available

13

Efficiency

Resources that are used to its fullest potential

14

What is an example of productivity

Most productive I take 5 shots of vodka in 20 minutes
If I take 4 shots I am not reaching my fullest potential

15

Trade off

giving up one thing for the other

16

Business Cycle

The movement in economic activity

17

What is an example of market failure?

When the government prices items instead of the consumer (cigarettes)

18

Market Power

When a firm or person influences market prices

19

Inflation

When prices increase in an economy

20

Productivity

What you produce given the amount of work

21

Opportunity cost

Cost of what you give up

22

What is an example of market power?

Monopoly

23

Economics

Study of how an economy manages scarcity

24

Name 3 items that have property rights

My IPAD
Land I own
An idea that I own

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