10381888
Description
Flashcards by Jacqueline Jatzen, updated more than 1 year ago
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Created by Jacqueline Jatzen
over 6 years ago
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| Question | Answer |
| Individual Choice | Is the decision by an individual of what to do, which necessarily involves a decision of what not to do. All economic activities involve individual choice. |
| Resource | It can be anything that can be used to produce something else. |
| Scarce | Resources are scarce- not enough of the resource are available to satisfy all the various ways a society wants to use them. |
| Opportunity Cost | Is the next best alternative forgone. This is the real cost of an item; what you must give up in order to get the next best thing. All costs are opportunity costs. Monetary costs are often a good indicator of opportunity costs, but not always. |
| Trade-Off | You make a trade-off when you compare the costs with the benefits of doing something. |
| Trade | In a market economy, individuals engage in trade: they provide goods and services to others and receive goods and services in return. |
| Gains from Trade | People can get more of what they want through trade than they could if they tried to be self-sufficient. |
| Specialization | Is a situation in which different people each engage in a different task, specializing in those tasks that they are good at preforming. |
| Equilibrium | An economic situation is in equilibrium when no individual would be better off doing something different. Because people respond to incentives, markets move toward equilibrium. |
| Efficient | An economy is efficient if it takes all opportunities to make some people better of without making other people worse off. Because people usually exploit gains from trade, markets usually lead to efficiency. Resources should be used as efficient as possible to achieve society’s goals. |
| Equity | Equity means that everyone gets his or her fair share. Since people can disagree about what’s “fair”, equity isn’t as well defined a concept as efficiency. |
| Marginal Decisions | Is the decision about whether to do a bit more or a bit less of an activity. |
| Marginal Analysis | The study of marginal decisions is called marginal analysis. |
| Incentive | This is anything that offers rewards to people who change their behavior. Because people usually exploit opportunities to make themselves better off, incentives can change people’s behavior. |
| Interaction | It’s a feature of most economic situations. The results of interactions are often very different from what the individuals intend. |
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