Term
| The 10 Principles of Economics |
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Definition
1. People Face Trade-Offs
2. The Cost of something is what you give up to get it.
3. Rational People Think at the Margin
4. People Respond to Incentives
5. Trade Can Make Everyone Better Off
6. Markets are usually a good way to organize economic activity
7. Governments can sometimes improve market outcomes
8. A country's standard of living depends on its ability to produce goods and services.
9. Prices Rise when the government prints too much money
10. Society faces a short-run trade-off between inflation and unemployment. |
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| the limited nature of society's resources |
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| the study of how society manages its scarce resources |
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| the property of society getting the most it can from its scarce resources |
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| the property of distributing economic prosperity fairly among the members of society |
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| Whatever must be given up to obtain some item |
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| people who systematically and purposefully do the best they can to achieve their objectives |
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| small incremental adjustments to a plan of action |
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| something that induces a person to act |
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| an economy that allocates resources through the decentralized decisions of many firms and households as they interact in markets for goods and services |
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| the ability of an individual to own and exercise control over scarce resources |
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| a situation in which a market left on its own fails to allocate resources efficiently |
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| the impact of one person's actions on the wellbeing of a bystander |
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| the ability of a single economic actor to have a substantial influence on market prices |
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| the quantity of goods and services produced from each hour of a worker's time. |
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| an increase in the overall level of prices in the economy |
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| fluctuations in economic activity, such as employment and production |
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| a visual model of the economy that shows how dollars flow through markets among households and firms |
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| Production possibilities frontier |
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Definition
| a graph that shows the combinations of output that the economy can possibly produce given the available factors of production technology |
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| claims that attempt to describe the world as it is |
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| claims that attempt to prescribe how the world should be |
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| the ability to produce a good using fewer inputs than another producer |
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| whatever must be given up to obtain some item |
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| the ability to produce a good at a lower opportunity cost than another producer |
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| goods produced abroad and sold domestically |
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| goods produced domestically and sold abroad |
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