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Macroeconomics Ch 1 4th Ed. Hubbard O'brian
Chapter One
19
Economics
Undergraduate 2
05/19/2012

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