Chapter 1 terms

Chapter 1 terms - Chapter 1 Scarcity- the limited nature of...

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Chapter 1 —Scarcity- the limited nature of society’s resources —Trade-off- the more a society spends on national defense to protect its shores from foreign aggressors the less it can spend on consumer goods to raise a standard of living at home —Opportunity cost- whatever must be given up to obtain some item —Incentives- something that induces a person to act —Efficiency- the property of society getting the most it can from its scarce resources —Equality- the property of distributing economics prosperity uniformly among the member of society —Rational behavior- people who systematically and purposefully do the best they can to achieve their objectives —Marginal (change)- small incremental adjustments to a plan of action —Markets economy- an economy that allocates resources through the decentralized decisions of many firms and households as they interact in markets for goods and service —Market failure- a situation in which a market left on its own fails to allocate resources —Market power- the ability of a single economic actor (or small groups of actors) to have a substantial influence on market prices Chapter 2 —Scientific method- economists use this like scientists —Conceptual models- circular flow diagram and production possibility frontier —Empirical observation- —Ceteris paribus- assumption “what if… when all else is equal —Inefficiency-
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Chapter 1 terms - Chapter 1 Scarcity- the limited nature of...

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