Econ Ch. 1
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.