Macroeconomics exam 1

marginal analysis

Making choices based on comparing marginal benefits with marginal costs

Opportunity cost

Next best thing that must be forgone in order to produce one more unit of a given product.

mutually agreeable

Economic transactions willingly undertaken by both the buyer and the seller because each feels that the transaction will make him or her better off

Freedom of choice

Freedom of resource owners to dispose of their resources as they think best; of workers to enter any line of work for which they are qualified; and of consumers to spend their incomes in whatever way they feel is most appropriate

Economics

Social Science concerned with how individuals, institutions, and society make optimal choices under conditions of scarcity

market

an institution that brings buyers and sellers together together

freedom of enterprise

the freedom of firms to obtain economic resources, and sell those products in markets of their choice

utility

the pleasure, happiness, or satisfaction obtained from consuming a good or service

competition

the presence in a market of independent buyers and sellers who compete with one another and who are free to enter and exit the market as they see fit

private property

the right of private persons and firms to obtain, control, employ, dispose of, and bequeath land, capital, and other property

self interest

what each individual or firm believes is best for itself and seeks to obtain