Econ Ch. 1

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Equilibrium

no individual would be better off doing something different.

Microeconomics

the branch of economics that studies how people make decisions and how those decisions interact.

If market failures exist, it becomes more economically efficient for

the government to intervene to improve society's welfare.

Efficient

taking care of all opportunities and making people better off.

Individual choice has three characteristics... what are they????

A. Resources are scarce B. The real cost of something is what you must give up to get it. C. "How much?" is a decisions at the margin.

The condition of scarcity means that..

Choices must be made in the allocation of productive resources

Would economists agree... "Resources and inputs used in production are unlimited"

HECK NO

Choice Interaction

How my choices affect your choices.

Gains from Trade

In a market economy, individuals engage in trade: individuals provide goods and services to others and receive goods and services in return.

The benefits of just going one more step or doing one more thing

Marginal Analysis

Exchanges taking place in a market system

are voluntary

An opportunity cost arises..

Whenever any choice is made

Would economists agree with this statement.. "People usually exploit opportunities to make themselves better off"

Yes

Incentive

anything that offers rewards to people who change their behavior

Economists generally agree that people are most likely to chance their behavior when they

are given INCENTIVES to do so.

Scarcity means..

choices must be made in the allocation of productive resources.

Resources and inputs used in production are unlimited.. Economists agree or disagree?

disagree!!!!!!!!

Recession

economic DOWNTURN

An outcome where no one has any incentive to change decisions is one of..

equilibrium

Equity

getting your fair share.

What happens when markets don't achieve efficiency?

government intervention can improve society's welfare.

Market Interaction Result

how does this decision impact the market

Resource

land, labor, and capital that can be used to produce something else

Market Failure

personal interest leads to a bad economy

The Wealth of Nations pin points..

specialization

Economy

system for coordinating society's productive activities.

Market failure results when

the pursuit of an individual self-interest leads to bad result for society as a whole.

Opportunity Cost

the real cost of an item, what you must give up to get it.

Economics

the social science that studies the production, distribution, and consumption of GOODS and services.

Specialization

when each person specializes in the task he or she is good at performing.


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