Ten Principles of Economics

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Vocabulary and the 10 Principles of Microeconomics
Nandana Kulasekhar
Flashcards by Nandana Kulasekhar, updated more than 1 year ago
Nandana Kulasekhar
Created by Nandana Kulasekhar about 5 years ago
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Question Answer
Scarcity The limited nature of society's resources
Economics The study of how society manages its scarce resources
Efficiency The property of society getting the most it can from its scarce resources
Equality The property of distributing economic prosperity uniformly among the members of society
Opportunity Cost Whatever must be given up to obtain some item
Rational People People who systematically and purposefully do the best they can to achieve their objective
Marginal Change A small incremental adjustment to a plan of action
Incentive Something that induces a person to act
Market Economy An economy that allocates resources through the decentralized decisions of many firms and households as they interact in markets for goods and services
Property Rights The ability of an individual to own and exercise control over scarce resources
Market Failure A situation in which a market left on its own fails to allocate resources efficiently
Externality The impact of one person's actions on the well-being of a bystander
Market Power The ability for a single economic actor to have a substantial influence on market prices
Productivity The quantity of goods and services produced from each unit of labor input
Inflation An increase in the overall level of prices in the economy
1st Principle of Microeconomics People Face Trade-offs
2nd Principle of Microeconomics The Cost Of Something Is What You Give Up To Get It
3rd Principle of Microeconomics Rational People Think At The Margin
4th Principle of Microeconomics People Respond To Incentives
5th Principle of Microeconomics Trade Can Make Everyone Better Off
6th Principle of Microeconomics Markets Are Usually A Good Way To Organize Economic Activity
7th Principle of Microeconomics Governments Can Sometimes Improve Market Outcomes
8th Principle of Microeconomics A Country's Standard Of Living Depends On Its Ability To Produce Goods and Services
9th Principle of Microeconomics Prices Rise When The Government Prints Too Much Money
10th Principle of Microeconomics Society Faces A Short-Run Trade-off Between Inflation And Unemployment
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