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ECO 210 Notes Chapter 1

ECO 210 Notes Chapter 1 - – so individuals can own and...

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ECO 210 Notes Chapter 1: Ten Principles of Economics Efficiency (societal) – society is getting the maximum benefits from its scarce resources. Equality – benefits are distributed uniformly among society’s members Opportunity Cost – an item is what you give up to get that item. Rational People – systematically and purposefully do the best they can to achieve their objectives, given the available opportunities. Marginal Change – describe a small incremental adjustment to an existing plan of action. Incentive – something that induces a person to act, such as the prospect of a punishment or a reward. Market Economy – the decisions of a central planner are replaced by the decisions of millions of firms and households. Property Rights
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Unformatted text preview: – so individuals can own and control scarce resources. Market failure – refers to a situation in which the market on its own fails to produce an efficient allocation of resources. Externality – impact of one person’s actions on the well-being of a bystander. Market Power – which refers to the ability of a single person (or small group) to unduly influence market prices. Productivity – amount of good and services produced from each unit of labor input. Inflation – increase in the overall level of prices in the economy. Business-cycle – the irregular and largely unpredictable fluctuations in economic activity, as measured by the production of goods and services or the number of people employed....
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