Vocab Chapters 1-5 & 7 - Economics the study of how...

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Economics: the study of how society manages 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 society Oppurtunity 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 Incentives: 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 fro 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 efficithe ently Externality: the impact of one person’s actions on the wellbeing of the bystander Market Power: the ability of a single economic actor to have 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:
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