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Definition
| The situation in which unlimited wants exceed the limited resources available to fulfill those wants. |
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| The study of the choices people make to attain their goals, given their scarce resources. |
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Term
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Definition
| A simplified version of reality used to analyze the real-world economic situations. |
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Definition
| A group of buyers and sellers of a good or service and the institution or arrangement bu which they come together to trade. |
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Definition
| Analysis that involves comparing marginal benefits and marginal costs. |
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Term
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Definition
| The idea that because of scarcity, producing more of good or service means producing less of another good or service. |
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Definition
| The highest-valued alternative that must be given up to engage in an activity. |
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| Centrally Planned Economy |
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Definition
| An economy in which the government decides how economic resources will be allocated. |
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Term
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Definition
| An economy in which the decisions of households and firms interacting with markets allocate economic resources. |
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Definition
| An economy in which most economic decisions result from the interaction of buyers and sellers in markets but in which the government plays a significant role in the allocation of resources. |
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Definition
| The situation in which a good or service is produced at the lowest possible cost. |
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Definition
| A state of the economy in which the production is in accordance with consumer preferences; in particular, every good or service is produced up to the point where the last unit provides a marginal benefit to society equal to the marginal cost of producing it. |
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Definition
| The 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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Definition
| The fair distribution of economic benefits. |
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Term
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Definition
| Something measurable that can have different values. |
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Term
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Definition
| Analysis concerned with what is. |
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Term
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Definition
| Analysis concerned with what ought to be. |
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Term
| Production Possibilities Frontier (PFF) |
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Definition
| A curve showing the maximum attainable combinations of two products that may be produced with available resources and current technology. |
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Term
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Definition
| The ability if the economy to produce increasing quantities of goods and services |
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Term
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Definition
| The act of buying or selling. |
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Term
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Definition
| The ability of an individual, a firm, or a country to produce more of a good or service than competitors, using the same amount of resources |
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Term
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Definition
| The ability of an individual, a firm, or a country to produce a good or service at a lower opportunity cost than competitors. |
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Term
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Definition
| Markets for goods and services |
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Term
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Definition
| Markets for the factors of production, such as labor, capital, natural resources, and entrepreneurial ability. |
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Term
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Definition
| The inputs used to make goods and services. |
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Term
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Definition
| A model that illustrates how participants in markets are linked. |
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Term
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Definition
| A market with few government restrictions on how a good or service can be produced or sold or on how a factor of production can be employed. |
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Term
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Definition
| Someone who operates a business, bringing together the factors of production- labor, capital, and natural resources- to produce goods and services. |
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Term
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Definition
| The rights individual or firms have to the exclusive use of their property, including the right to buy or sell it. |
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Term
| Perfectly Competitive Market |
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Definition
| A market that meets the conditions of (1) many buyers and sellers, (2) all firms selling identical products, and (3) no barriers to new firms entering the market. |
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Term
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Definition
| A table showing the relationship between the price of a product and the quantity of the product demanded. |
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Term
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Definition
| The amount of a good or service that a consumer is willing and able to purchase at a given price. |
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Term
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Definition
| A curve that shows the relationship between the price of a product and the quantity of the product demanded. |
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Term
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Definition
| The demand by all the consumers of a given good or service. |
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Term
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Definition
| The rule that, holding everything constant, when the price of a product falls, the quantity demanded of the product will increase, and when the price of a product will increase, and when the price of a product rises, the quantity demanded of a product will decrease. |
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Term
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Definition
| The change in the quantity demanded of a good that results from a change in price, making the good more or less expensive relative to other goods that are substitutes. |
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Term
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Definition
| The change in the quantity of a good that results from the effect of a change in the good's price on consumers' purchasing power. |
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Term
| Ceteris Paribus ("all else equal") |
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Definition
| The requirements that when analyzing the relationship between two variables- such as price and quantity demanded- other variables must be held constant. |
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Term
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Definition
| A good for which the demand increases as income rises and decreases as income falls. |
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Term
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Definition
| A good for which the demand increases as income falls and decreases as income rises. |
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Term
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Definition
| Goods and services that can be used for the same purpose. |
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Term
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Definition
| Goods and services that are used together. |
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Term
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Definition
| The characteristics of a population with respect to age, race, and gender. |
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Term
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Definition
| A table that shows the relationship between the price of a product and the quantity of a product supplied. |
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Term
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Definition
| A curve that shows the relationship between the quantity of the product supplied. |
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Term
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Definition
| The rule that, holding everything else constant, increases in price cause increases in the quantity supplied, and decreases in price cause decreases in the quantity supplied. |
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Term
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Definition
| A positive or negative change in the ability of an firm to produce a given level of output with a given quantity of inputs. |
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