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| The study of the allocation and use of scarce resources to satisfy unlimited human wants. |
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| Not freely available and lacking a finite source. seasonal unemployment State that exists when people lose their jobs predictably every year at the same time. |
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| Anything that is consumed directly or used to make things that will ultimately be consumed |
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| The forgone alternative of the choice made. |
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| production possibilities frontier |
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| a graph which relates the amounts of different goods that can be produced in a fully employed society |
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| a simplification of the real world that can be manipulated to explain the real world |
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| An assumption that may, on its face, be silly but allows for a clear explanation. |
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| A situation that occurs when resources are not being fully utilized. |
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| Levels of production that are possible with the given resources. |
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| Levels of production that are not possible with the given resources. |
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| a model which depicts the interactions of all economic actors |
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| any mechanism by which buyers and sellers negotiate an exchange |
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| A mechanism by which buyers and sellers of labor and financial capital negotiate an exchange. |
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| A mechanism by which buyers and sellers of the currencies of various countries negotiate an exchange. |
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| goods and services market |
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| A mechanism by which buyers and sellers of goods and services negotiate an exchange. gross domestic product (GDP) The dollar value of all of the goods and services produced for final sale in the United States in a year. |
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| An assumption that suggests that the person in question is trying to maximize some objective. |
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| the increase in the benefit that results from an action |
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| the increase in the cost that results from an action |
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| The difference between all benefits and all costs. net present value The difference between the present value of benefits and the present value of costs. |
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| A form of analysis that seeks to understand the way things are and why they are that way. |
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| A form of analysis that seeks to understand the way things should be. |
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| Something that influences a decision we make. income effect An increase in price lowers spending power; if the good is normal, this further lowers consumption; if it is inferior, it can increase consumption back toward where it was (or even further). This effect works in either direction. income elasticity of demand The responsiveness of quantity to a change in income. |
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| The mistake in logic that suggests that the total economic impact of something is always and simply equal to the sum of the individual parts. |
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| A higher level of one variable is associated with a higher level of the other variable. |
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| A change in one variable makes another variable change. |
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| A higher level of one variable is associated with a lower level of the other variable. |
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