ECO chapter 1 reveiw

Scarcity

We have limited resources but unlimited wants.

Oppurtunity costs

What you give up to get something.

Rational people

People who systematically compare costs and benefits.

Marginal Change

A small, additional change to an existing plan.

Incentive

Something that encourages or discourages an action.

Efficiency

Getting the maximum possible benefit from scarce resources.

Equality

Distributing economic prosperity more evenly among people.

Market economy

Economic decisions are made largely by buyers and sellers.

Property rights

The legal right to own and control resources.

Market failure

When the market itself fails to allocate resources efficiently.

Externality

A side effect of someone's action that affects a third party.

Market power

The ability of one person/company to significantly influence market prices.

Productivity

How much output is produced per unit of input.

Inflation

An increase in the overall level of prices.

Business cycle

Fluctuations in economic activity over time.