intro to micro vocab

intro to micro vocab - Chapter 1 Scarcity The limited...

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Chapter 1 Scarcity – The limited nature of society’s resources Economics – The study of how society manages its scarce resources Efficiency – The property of society getting the most it can from its scare resources Equity – the property of distributing economic prosperity fairly among the members of society 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 decision of many firms and households as they interact in markets for goods and services 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 prices Productivity – the quantity of goods and services produced from each hour of a worker’s time Inflation – An increase in the overall level of prices in the economy Business cycle –Fluctuations in economic activity, such as employment and production Chapter 2 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 shows the combinations of output that that the economy
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This note was uploaded on 10/29/2008 for the course ECONOMICS 101 taught by Professor June during the Fall '08 term at Rutgers.

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intro to micro vocab - Chapter 1 Scarcity The limited...

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