Macroeconomics Ch 1-3

When society requires that firms reduce pollution, there is

a tradeoff because of reduced incomes to the firms' owners and workers

The terms equality and efficiency are similar in that they both refer to benefits to society. However they are different in that

equality refers to uniform distribution of those benefits and efficiency refers to maximizing benefits from those scarce resources

When the government redistributes income from the wealthy to the poor,

equality is improved, efficiency is not

Economics is the study of

how society manages its scarce resources

In most societies, resources are allocated by

the combined actions of millions of households and firms

A society allocates its scarce resources to various jobs. These scarce resources include

land, people and machines

Billie Jean has $120 to spend and wants to buy either a new amplifier for her guitar or a new mp3 player to listen to music while working out. Both the amplifier and the mp3 player cost $120, so she can only buy one. This illustrates the basic concept that

people face tradeoffs

The phrase "no such thing as a free lunch" means

people must face tradeoffs

The overriding reason why households and societies face many decisions is that

resources are scarce

Economics deals primarily with the concept of

scarcity

When a society cannot produce all the goods and services people wish to have, it is said that the economy is experiencing

scarcity

what term refers to the property that society has limited resources and therefore cannot produce all the goods and services they wish to have

scarcity

efficiency means that

society is getting the maximum benefits from its scarce resources