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| Limited resources and unlimited wants. This is the basic fact that creates the economic problem. |
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| The value of the next-best alternative you give up when you make a choice. |
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| Thinking in terms of one more unit. Decisions are made by comparing extra benefit to extra cost. |
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| People try to get the most benefit they can from limited resources, given their preferences and information. |
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| Satisfaction or benefit a person gets from a good or action. |
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| Dissatisfaction, pain, or cost from an action or bad. |
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| Man-made resources used to produce other goods (tools, machines, buildings, software). Not money itself. |
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| Philosopher of natural rights: life, liberty, and property. Strong influence on classical liberals and limited government. |
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| Thinkers who favored individual liberty, private property, limited government, and free markets (Locke, Smith, and later classical economists). |
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| Rivalry among sellers and buyers. In Smith's view it keeps prices in check and pushes producers to serve customers. |
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| A good that is non-excludable and non-rivalrous (example: national defense, basic research). Markets underprovide these. |
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| A resource that is rivalrous but hard to exclude people from (fisheries, some water). Can be overused (tragedy of the commons). |
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| When one party takes more risk because someone else bears the cost (example: insured person is less careful). |
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| An economic system where the state or community owns or heavily controls the means of production and allocates resources by plan more than by market. |
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| The idea of applying "survival of the fittest" to society and markets; used historically to justify inequality and little government help for the poor. |
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| Marx and Engels' claim that socialism is based on scientific analysis of history and class struggle, not just moral wishes. |
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| Authoritarian system that keeps private ownership in name but puts production under state control and suppresses political opposition. |
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| Makes laws. In the U.S., Congress (Senate and House). |
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| Thinker who argued for separation of powers so no one branch of government becomes too strong. |
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| Head of the executive branch; enforces laws, commander in chief, appoints officials with Senate advice and consent. |
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| System that formally elects the U.S. president. Each state has electors equal to its House + Senate seats. |
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| Powers written directly in the Constitution (also called enumerated powers). |
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| How income, wealth, or goods are divided among people. |
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| A way of ranking whole social outcomes, combining individuals' well-being into one measure of "society is better off." |
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| Fairness in how resources or outcomes are shared. Different people define fairness differently. |
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| A form of government where power is held by the people through elected representatives, not a monarch. |
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| A direct, out-of-pocket money payment (wages, rent, materials). |
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