BA 1310 Week 1 Vocab

Scarcity

The idea of unlimited wants and limited resources

Economy

A group of people dealing with each other as they live their lives

Efficiency

Using the most out of scarce resources

Equality

How the use of scarce resources are split evenly in a society

Opportunity Cost

The cost of the 2nd best option that is lost when you make a decision

Rational People

People who make the most efficient choices with their resources to reach their goals

Marginal Change

A slight change to a plan, opposed to “all or nothing”

Marginal Cost

The actual cost of producing one more of a good

Marginal Benefit

The additional value of getting one more of a good

Incentive

Something that induces someone to act

Market Economy

an economy controlled entirely by individuals, decentralized economy

Wealth of Nations

By Adam Smith, a book about the Invisible Hand

Invisible Hand

A force that leads market economies to grow, based on mutual benefit

Market Failure

What happens if a market economy does not use its resources efficiently

Externality

Unrpriced cost of a transaction that affects unrelated people

Market Power

The ability of someone to influence the economy

Productivity

How effectively units of input are being used to create goods/services

Inflation

The devaluation of money