Use LEFT and RIGHT arrow keys to navigate between flashcards;
Use UP and DOWN arrow keys to flip the card;
H to show hint;
A reads text to speech;
21 Cards in this Set
- Front
- Back
ten principles of economics
|
people face trade offs; opportunity cost; rational people think at the margin; people respond to incentives; trade can be good; markets are usually good; gov't can sometimes be good; standard of living depends on efficiency; inflation occurs when too much $; short run trade off btwn inflation & unemploymnt
|
|
economics
|
study of allocation of scarce resources
|
|
efficiency
|
property of society getting the most it can from its scarce resources; entire pie
|
|
equality
|
property of distributing economic prosperity uniformly among people
|
|
opportunity cost
|
whatever must be given up to obtain something
|
|
rational people
|
people who systematically & purposefully do the best they can to achieve objectives
|
|
marginal changes
|
additional plus one; small incremental adjustments 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
|
|
property rights
|
the ability of an individual to exercise and own control over scarce resources
|
|
market failure
|
a situation in which a market left on its own fails to allocate resources efficiently either because of an externality or market power
|
|
externality
|
impact of one person's actions on the well being of a bystander
|
|
market power
|
ability of a single economic factor to have a substantial influence on market prices
|
|
business cycle
|
fluctuations in economic activity, such as employment and production
|
|
circular flow diagram
|
visual model of the economy that shows how dollars flow through markets among households and firms
|
|
production possibilities frontier
|
graph that shows the combo of output that the economy can possibly produce given the available factors of production and the available production technology
|
|
microeconomics
|
study of how households and firms make decisions and how they interact in markets
|
|
macroeconomics
|
study of economy wide phenomena including inflation, unemployment and economic growth
|
|
positive statements
|
claims that attempt to describe the world as it is
|
|
normative statements
|
claims that attempt to prescribe how the world should be
|
|
absolute advantage
|
ability to produce a good using fewer inputs than another producer
|
|
comparative advantage
|
ability to produce a good at a lower opportunity cost than another producer
|