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These flashcards cover key terms and concepts from the lecture on microeconomics, focusing on principles of decision-making, resource allocation, and market interactions.
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Scarcity
The limited nature of society’s resources, meaning society cannot produce all the goods and services people want.
Economics
The study of how society manages its scarce resources.
Trade-offs
To get one thing you want, you usually must give up another thing you want.
Opportunity Cost
The cost of an item measured by whatever must be given up to obtain it.
Marginal Benefit
The extra benefit from one more unit of a decision or action.
Marginal Cost
The extra cost from one more unit of a decision or action.
Incentive
Something that induces a person to act, often influencing their decision-making.
Market Economy
An economic system where resources are allocated through the decentralized decisions of many firms and households.
Trade
The act of buying and selling goods and services, which can make everyone better off.
Externality
A source of market failure, which occurs when the production or consumption of a good affects bystanders.