Chapter 1 Vocabulary- Micro

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Vocabulary/Key Terms for Chapter 1- Microeconomics
Olivia t
Flashcards by Olivia t, updated more than 1 year ago
Olivia t
Created by Olivia t about 5 years ago
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a group of buyers and sellers of a good or service and the institution or arrangement by which they come together to trade market
the study of the choices of consumer, business managers, and government officials to attain their goals given their scarce resources economics
situation in which unlimited wants exceed the limited resources available to fulfill those wants; we must make choices because of this. scarcity
the idea that, because of scarcity, producing more of one good or service means producing less of another good or service trade-off
highest valued alternative that must be given up to engage in an activity opportunity cost
when the government decides how economic resources will be allocated (ex: North Korea, Soviet Union) centrally planned government
decisions of households and firms interacting in markets allocate economic resources market economy
when economic decisions result from both interaction of buyers and sellers in the market and government plays a role in the allocation of the resources mixed economy
the ability of an economy to produce increasing quantities of goods and services economic growth
occurs when a good or service is produced at the lowest possible cost product efficiency
occurs when production is in accordance with consumer preferences allocative efficiency
occurs in markets when both buyer and seller of a product are made better off by the transaction voluntary exchange
goods and services bought domestically but produced in other countries imports
the fair distribution of economic benefits equity
simplified version of reality used to analyze real-world economic situations economic model
analysis concerned with "what is" positive analysis
analysis concerned with "what should be" normative analysis
study of how households and firms make choices, how they interact in markets and how the government attempts to influence their choices microeconomics
study of economy as a whole including topics such as inflation, unemployment, and economic growth macroeconomics
organization that produces a good or service firm, company, or business
someone who operates a business; decides "what" and "how" entrepreuner
practical application of an inventions; significant improvement in a good or in the means of producing a good innovation
processes it uses to produce goods and services technology
tangible merchandise (ex: books/computers) goods
activities done for others (ex: haircuts) services
total amount a firm receives for selling a good or service revenue
the difference between a firm's revenue and its costs profit
all persons occupying a house household
used by firms to produce goods and services factors of production, economic resources, or inputs
financial: stocks and bonds physical: computers, machine tools capital
accumulated training and skills that workers posses human capital
something measurable that can have different values (ex: income) economic variable
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