Vocabulary - Chapter 1 Vocabulary - Individual Choice: the...

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Chapter 1 Vocabulary - Individual Choice: the decision by an individual of what to do, which necessarily involves a decision of what not to do - Resource : anything, such as land, labor, and capital, that can be used to produce something else; includes natural resources (from the physical environment) and human resources (labor, skill, intelligence) - Scarce : in short supply; a resource is scare when there is not enough of the resource available to satisfy all the various ways a society wants to use it - Opportunity Cost : the real cost of an item: what you must give up to get it - Trade-off : a comparison of the costs and benefits of doing something - Marginal Decisions : a decision made at the “margin” of an activity to do a bit more or a bit less of that activity - Marginal Analysis : the study of marginal decisions - Incentive : anything that offers rewards to people who change their behavior - Interaction: my choices affect your choices, and vice versa; a feature of most economic situations. The results of this interaction are often quite different from what the individuals intend - Trade: when individuals provide goods and services to others and receive goods and services in return - Gains From Trade: an economic principle that states that by dividing tasks and trading, people can get more of what they want through trade than they could if they tried to be self-sufficient - Specialization: a situation in which different people each engage in the different task that he or she is good at performing - Equilibrium: an economic situation in which no individual would be better off doing something different - Efficient: describes a market or economy that takes all opportunities to make some people better off without making other people worse off - Equity: fairness; everyone gets his/her fair share. Since people can disagree about what’s fair, equity isn’t as well defined a concept as efficiency. Chapter 3 Vocabulary
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- Competitive Market : a market in which there are many buyers and sellers of the same good or service, none of whom can influence the price at which the good/service is sold - Supply and Demand Model : a model of how a competitive market works - Demand Schedule : a list or table showing how much of a good or service consumers will want to buy at different prices - Quantity demanded: the actual amount of a good or service consumers are willing to buy at some specific price - Demand Curve: a graphical representation of the demand schedule, showing the relationship between quantity demanded and price - Law of Demand: the principle that a higher price of a good/service, other things equal, leads people to demand a smaller quantity of that good/service - Shift of the Demand Curve: a change in the quantity demanded at any given price, represented graphically by the change of the original demand curve to a new position, denoted by a new demand curve - Movement along the Demand Curve: a change in the quantity demanded of a good that results from a change in the price of that good
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Vocabulary - Chapter 1 Vocabulary - Individual Choice: the...

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