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Economics Midterm
Ch. 1
19
Economics
Undergraduate 3
10/24/2008

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Cards

Term
Scarcity
Definition
The situation in which unlimited wants exceed the limited resources available to fulfill those wants.
Term
Economics
Definition
The study of the choices people make to attain their goals, given their scarce resources.
Term
Economic model
Definition
A simplified version of reality used to analyze real-world economic situations.
Term
Market
Definition
A group of buyers and sellers ofa good or service and the institution or arrangement by which they come together to trade.
Term
Marginal analysis
Definition
Analysis that involves comparing marginal benefits and marginal costs.
Term
Trade-off
Definition
The idea that because of scarcity, producing more of one good or service means producing less of another good or service.
Term
Opportunity Cost
Definition
The highest-valued alternative that must be given up to engage in an activity.
Term
Centrally planned economy
Definition
An economy in which the government decides how economic resources will be allocated.
Term
Market economy
Definition
An economy in which the government decides how economic resources will be allocated.
Term
Mixed economy
Definition
An economy in which most economic decisions result from the interaction of buyers and sellers in markets but in which the government plays a significant role in the allocation of resources.
Term
Productive efficiency
Definition
The situation in which a good or service is produced at the lowest possible cost.
Term
Allocative efficiency
Definition
A state of the economy in which production is in accordance with consumer preferences; in particular, every good or service is produced up to the point where the last unit provides a marginal benefit to society equal to the marginal cost of producing it.
Term
Voluntary Exchange
Definition
The situation that occurs in markets when both the buyer and seller of a product are made better off by the transaction.
Term
Equity
Definition
The fair distribution of economic benefits.
Term
Economic variable
Definition
Something measurable that can have different values, such as the wages of software programmers.
Term
Positive analysis
Definition
Analysis concerned with what is.
Term
Normative analysis
Definition
Analysis concerned with what ought to be.
Term
Microeconomics
Definition
The study of how households and firms make choices, how they interact in markets, and how the government attempts to influence their choices.
Term
Macroeconomics
Definition
The study of the economy as a whole, including topics such as inflation, unemployment, and economic growth.
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