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| The conflict between equality and efficiency. |
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| The tools, equipment, buildings, and other constructions that businesses use to produce goods and services. |
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| Other things being equal – all other relevant things remaining the same. |
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| A description of some aspect of the economic world that includes only those features of the world that are needed for the purpose at hand. |
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| The social science that studies the choices that we make as we cope with scarcity and the incentives that influence the reconcile those choices. |
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| A generalization that summarizes what we think we understand about the economic choices that people make and the performance of industries and entire economies. |
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| The human resources that organizes the other three factors of production: labor, land, and capital. |
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| The resources used to produce goods and services. |
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| All the objects that people value and produce to satisfy human wants. |
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| The knowledge and skill that people obtain from education, on-the-job training, and work experience. |
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| A reward that encourages or a penalty that discourages an action. |
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| The income that capital earns. |
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| The work time and work effort that people devote to producing goods and services. |
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| the gifts of nature that we use to produce goods and services |
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| The study of the performance of the national economy and the global economy. |
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| When a choice is changed by a small amount or by a little at a time, the choice is made at the margin. |
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| The benefit that a person receives from consuming one more unit of a good or service. It is measured as the maximum amount that a person is willing to pay for one more unit of the good or service. |
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| The opportunity cost of producing one more unit of a good or service. It is the best alternative forgone. It is calculated as the increase in total cost divided by the increase in output. |
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| The study of the choices that individuals and businesses make, the way these choices interact in markets, and influence of governments. |
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| The highest-valued alternative that we give up to get something. |
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| The income earned by entrepreneurship. |
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| The income that land earns. |
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| Our inability to satisfy all our wants. |
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| The choices that you think are best for you. |
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| Choices that are the best for society as a whole. |
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| A constraint that involves giving up one thing to get something else. |
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| The income that labor earns. |
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| A person has an absolute advantage if that person is more productive than another person. |
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| A situation in which we cannot produce more of any good without giving up some of another good that we value more highly |
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| The growth of capital resources, including human capital. |
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| if that person or country can perform the activity at a lower opportunity cost than anyone else or any other country. |
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| Dynamic comparative advantage |
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| advantage that a person or country possesses as a result of having specialized in a particular activity and then, as a result of learning-by-doing, having become the producer with the lowest opportunity cost. |
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| The expansion of production possibilities that results from capital accumulation and technological change. |
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| An economic unit that hires factors of production and organizes those factors to produce and sell goods and services. |
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| People become more productive in an activity just by repeatedly producing a particular good or service. |
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| The benefit that a person receives from consuming one more unit of a good or service. It is measured as the maximum amount that person is willing to pay for one more unit of that good and the quantity of that good consumed. |
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| A curve that shows that relationship between the marginal benefit of a good and the quantity of that good consumed. |
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| Any arrangement that enables buyers and sellers to get information and to do business with each other. |
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| Any commodity or token that is generally acceptable as the means of payment. |
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| A description of person’s likes and dislikes. |
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| A situation in which the economy cannot produce more of one good without producing less of some other good. |
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| Production possibilities frontier |
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| The boundary between the combinations of goods and services that can be produced and the combinations that cannot. |
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| Social arrangements that govern the ownership, use, and disposal of anything that people value that are enforceable in the courts. |
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| The development of new goods and of better ways of producing goods and services. |
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| A change in buyers’ plans that occurs when some influence on those plans other than the price of the good changes. It is illustrated by a shift of the demand curve. |
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| A change in sellers’ plans that occurs when some influence on those plans other than the price of the good changes. It is illustrated by a shift of the supply curve. |
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Term
| Change in the quantity demanded |
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Definition
| A change in buyers’ plans that occurs when the price of a good changes but all other influences on buyers’ plans remain unchanged. It is illustrated by a movement along the demand curve. |
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| Change in the quantity supplied |
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Definition
| A change in sellers’ plans that occurs when the price of a good changes but all other influences on sellers’ plans remain unchanged. It is illustrated by a movement along the supply curve. |
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| A market that has many buyers and many sellers, so no single buyer or seller can influence the price. |
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| A good that is used in conjunction with another good. |
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| The entire relationship between the price of the good and the quantity demanded of it when all other influences on buyers’ plans remain the same. It is illustrated by a demand curve and described by a demand schedule. |
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| A curve that shows the relationship between the quantity demanded of a good and its price when all other influenc |
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| The price at which the quantity demanded equals the quantity supplied. |
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| A good for which demand decreases as income increases. |
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| The quantity bought and sold at the equilibrium price. |
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| Other things remaining the same, the higher the price of a good, the smaller is the quantity demanded of it; the lower the price of a good, the larger is the quantity demanded of it. |
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| Other things remaining the same, the higher price of a good, the greater is the quantity supplied of it. |
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| The number of dollars that must be given up in exchange for a good or service. |
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| A good for which demand increases as income increases. |
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| The amount of a good or service that consumers plan to buy during a given time period at a particular price. |
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| The amount of a good or service that producers plan to sell during a given time period at a particular price. |
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Definition
| The ratio of the price of one good or service to the price of another good or service. A relative price is an opportunity cost. |
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| A good that can be used in place of another good. |
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Definition
| The entire relationship between the price of a good and the quantity supplied of it when all other influences on producers’ planned sales remain the same. It is described by a supply schedule and illustrated by a supply curve. |
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Term
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Definition
| A curve that shows the relationship between the quantity supplied of a good and its price when all other influences on producers’ planned sales remain the same. |
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