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Mirco Econ
Chapter 1 vocab first Principles
15
Economics
Undergraduate 2
02/12/2010

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Term
Individual choice
Definition
Is the decisoin by an individuals of what to do, which is necessarily involves a decision no to do.
Term
resource
Definition
Is anything that can be used to produce something else.
Term
Scarce
Definition
Recources are scarce- there is not enough of the resources available to satisfy all the various ways a society to use them.
Term
opprotunity Cost
Definition
The real cost of an item is its opprotunity cost: What you must give up in order to get it.
Term
Trade off
Definition
You make a  Trade off- when you compare the costs with the beneifits of doing something.
Term
Marginal decision
Definition
Decisions about whether to do a bit more or a bit less of an activity.
Term
Marginal analysis
Definition
The study of  Marginal decisions is know as Margianl analysis.
Term
Incentive
Definition
Is anything that offers rewards to people who can change their behavior.
Term
Interaction
Definition
interaction- of choices-my choices affect your choices and vice versa- is a feature of most economic situations. The results of this interaction are often quite different from what the individual intend.
Term
Trade
Definition
In a market economy individuals engage in Trade: they provide goods and services to others and recives goods and services in return.
Term
Gains from trade
Definition
people can get more of what they could if they tried to be self-suffcient. This increase in output is due to specialization.
Term
specialization
Definition
Each person specializes in the task that he or she is good at performing.
Term
Equilibrium
Definition
When no individual woul dbe better off doing something different.
Term
efficient
Definition
An economy is efficient if it takes all opprotunities to make some people better off without making other people worse off.
Term
Equity
Definition
means that everyone gets his or her fair share, since people can disagree about what's "fair," equity isn't as well defined a concept as efficiency.
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