Word Quiz 1 - Economics

scarcity

the limited nature of society’s resources

economics

the study of how society manages its scarce resources

efficiency

society is getting the maximum benefits from its scarce resources

equality

the idea of sharing economic wealth evenly among all 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 where resources are distributed based on the choices of many businesses and households as they buy and sell goods and services in markets

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 uncompensated impact of one person’s actions on the wellbeing 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