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Macro Econ - Chapter 1 vocab
From Principles of MacroEcon - Taylor/Weerapana
20
Economics
Undergraduate 1
02/07/2009

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Term
Economics
Definition
The study of how people deal with scarcity
Term
Scarcity
Definition
The situation in which the quantity of resoucres is insufcient
Term
Choice
Definition
A selection among alternative goods, services, or actions
Term
Economic Interactions
Definition
Exchange of goods and services between people
Term
Market
Definition
An arrangment by which econ exchanges between people take place
Term
Oppertunity Cost
Definition
The value of the next best forgone alternative that was not chosen because something else was choosen
Term
Gains from Trade
Definition
Improvements in income, production, or satisfaction owing to the exchange of goods or services
Term
Specialization
Definition
A concentration of production effort on a single specific task
Term
Division of Labor
Definition
The division of production into various parts in which different groups of workers specialize
Term
Comparative Advantage
Definition
A situation in which a person or group can produce one good at a lower opp cost than another person or group
Term
Production Possibilities
Definition
Alternative combinations of production of various goods that are possible, given the econ resources
Term
Increasing Oppertunity Cost
Definition
Situation in which producing more of one good requires giving up an increase amount of production of another good
Term
Production Possibilites Curve
Definition
A curve showing the maximum combo of production of two goods that are possible, given the econ resources
Term
Market Econ
Definition
An econ characterized by freely determined prices and the free exchange of goods and serives in markets
Term
Command Econ
Definition
An econ in which the gov determines prices and production, also called a centrally planned econ
Term
Freely Determined Prices
Definition
Prices that are determined by the indivduals and firms interaction in markets
Term
Property Rights
Definition
Rights over the use, sale, and proceeds from a good or resource
Term
Incentive
Definition
A device that motivates people to take action usually so as to increase economic efficiency
Term
Market Failure
Definition
Any Situations in which the market docs not lead to an efficient econ outcome and in which there is a potential role for gov
Term
Gov Failure
Definition
The situation where the gov fails to improve on the market or even makes things worse
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