Chapter 1 Ten Principles of Economics

Chapter 1 Ten Principles of Economics - Chapter 1: Ten...

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business cycle Fluctuations in economic activity, such as employment and production. economics The study of how society manages its scarce resources. efficiency The property of society getting the most it can from its scarce resources. equality The property of distributing economic prosperity uniformly among the members of society. externality The uncompensated impact of one person's actions on the well-being of a bystander. incentive Something that induces a person to act. inflation An increase in the overall level of prices in the economy. marginal changes 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. market failure A situation in which a market left on its own fails to allocate resources efficiently. market power
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