Principles of Microeconomics - Ten Principles of Economics
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Flashcards covering the ten principles of economics and related concepts.
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20 Terms
Scarcity
The limited nature of society's resources.
Economics
The study of how society manages its scarce resources.
What is a trade-off?
The act of giving up something to gain something else.
Efficiency
The property of society getting the most it can from its scarce resources.
Equality
The property of distributing economic prosperity uniformly among the members of society.
Opportunity Cost
Whatever must be given up to obtain some item.
Rational People
People who systematically and purposefully do the best they can to achieve their objectives.
Marginal Change
A small incremental adjustment to a plan of action.
Incentive
Something that induces a person to act.
Market Economy
An economy that allocates resources through the decentralized decisions of many firms and households as they interact in markets for goods and services.
Property Rights
The ability of an individual to own and exercise control over scarce resources.
Market Failure
A situation in which a market left on its own fails to allocate resources efficiently.
Externality
The impact of one person's actions on the well-being of a bystander.
Market Power
The ability of a single economic actor (or small group of actors) to have a substantial influence on market prices.
Productivity
The quantity of goods and services produced from each unit of labor input.
Inflation
An increase in the overall level of prices in the economy.
Business Cycle
Fluctuations in economic activity, such as employment and production.
What is the key to a country's standard of living?
A country's ability to produce goods and services.
What is the cause of inflation?
When a government creates large quantities of the nation's money, the value of the money falls.
What is the definition of business cycle?
The irregular and largely unpredictable fluctuations in economic activity, as measured by the production of goods and services or the number of people employed.