Chapter_1_Ten_Principles_of_Economics_1f495736bfc9f40d8e684bc565214989

What is the definition of scarcity in economics?

Scarcity is the limited nature of society's resources, which means society cannot produce all the goods and services people wish to have.

What are the three things that affect household decisions in economics?

Ability, effort, and desire.

What does economics study?

Economics studies how society manages its scarce resources.

What is the first principle of economics?

People face trade-offs.

What is the cost of something according to economics?

The cost of something is what you give up to get it.

What is the principle of rational people?

Rational people think at the margin and make systematic decisions based on marginal benefits and costs.

How can trade benefit individuals in an economy?

Trade can make everyone better off by allowing specialization and a greater variety of goods and services.

According to the sixth principle of economics, what is usually a good way to organize economic activity?

Markets are usually a good way to organize economic activity.

What does a country's standard of living depend on?

A country's standard of living depends on its ability to produce goods and services.

What is the relationship between government printing too much money and prices?

Prices rise when the government prints too much money, which can lead to inflation.

What is the short-run trade-off that society faces related to inflation and unemployment?

Society faces a short-run trade-off between inflation and unemployment.

Define opportunity cost in the context of decision making.

Opportunity cost is whatever must be given up to obtain some item.

What is meant by the 'invisible hand' in economics?

The 'invisible hand' refers to the self-regulating nature of the marketplace that promotes overall economic well-being.

What role do government institutions play in a market economy?

Government institutions enforce rules and property rights, promoting efficiency and equality in the market.

What are externalities in economics?

Externalities are the impact of one person's actions on the well-being of a bystander.

What are the two key aspects of efficiency and equality in economic decisions?

Efficiency refers to maximizing benefits from scarce resources, while equality refers to distributing economic prosperity uniformly among society members.

Why do traditional taxi drivers have concerns about Uber?

Traditional taxi drivers are concerned about Uber due to increased competition and regulatory differences.

How does higher productivity affect a nation's standard of living?

Higher productivity leads to a higher standard of living and determines the growth rate of a nation's average income.