Principles of Micro-Economics
Terms
undefined, object
copy deck
- Scarcity
- The limited nature of society's resources
- Economics
- The study of how society managges its scarce resources.
- Efficiency
- The property of society getting the most it can from its scarce resources.
- Equity
- the property of distributing economic prosperity fairly among the members of socity
- Opportunity cost
- whatever must be given up to obtain some item
- rational people
- people who systematically and purposefully do the best they can to achieve their objectives
- marginal changes
- small incremental adjustments to a plan of action
- incentive
- something that induces a person to act
- market economy
- an economy that allocates resources through the decentralized decisions of many firms and households as they interact in markets for good and servces
- property rights
- the ability of an individual to own and exercise control over scarce resources
- market failure
- a situation in which a market left on its own fails to allocate resources efficiently
- externality
- the impact of one person's actions on the well being of a bystander
- market power
- the ability of a single economic actor (or small group of actors) to have a substantial influence on market price
- productivity
- the quantiy of good and services produced from ach hour of a workers time
- inflation
- an increase in the overall level of prices in the economy
- buisness cycle
- fluctuations in economic activity, such as employment and production.
- Circular flow diagram
- a visual model of the economy that shows how dollars flow through markets among households and firms.
- Production Possibilities Frontier
- a graph that the combinations of output that the economy can possibly produce given the available factors of production and the available production technology
- microeconomics
- the study of how households and firms make decisions and how they interact in markets
- macroeconomics
- the 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
- the ability to produce a good using fewer inputs then another producer
- comparitive advantage
- the ability to produce a good at a lower opportunity cost then another producer
- imports
- goods produced abroad and sold domestically
- exports
- goods produced domestically and sold aborad