Macro Econ Quiz 1 Flashcards

Terms Definitions
A situation in which unlimited wants exceed the limited resources available to fulfill those wants
Economic Models
simplified versions of reality used to analyze real-world economic applications.
Using all available information to achieve your goals.
Marginal Analysis
Comparing MC and MB is known as Marginal Analysis.
The highest-valued alternative given up in order to engage in some activity
Opportunity cost
governments decide what to produce, how to produce it, and who received the goods and services.
Centrally planned economies
decisions of households and firms determine what is produced, how it is produced, and who receives the goods and services.
Market economies
A group of buyers and sellers
Most economic decisions result from the interaction of buyers and sellers, but governments play a significant role in the allocation of resources.
Mixed economies
where goods or services are produced at the lowest possible cost
Productive efficiency
where production is consistent with consumer preferences: the marginal benefit of production is equal to its marginal cost
Allocative efficiency,
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