econ chapter 1 key terms

economy

system for coordinating society’s productive activities

Economics

social science that studies production, distribution, consumption of goods and services

market economy

decisions about production + consumption are made by individual producers + consumers

invisible hand

way which individual pursuit of self interest can lead to good results for society as a whole

microeconomics

studies how people make decisions + how decisions interact

market failure

individual pursuit of interest leads to bad results for society as a whole

recessions

downturn in the economy m

macroeconomics

brach of economics focused on the overall ups and downs in economy

economic growth

The growing ability of the economy to produce goods and services

individual choice

decision by an individual of what to do which necessarily involves a decision of what not to do

resource

anything that can be used to produce something else s

scarce

not enough of resources are available to satisfy all the various ways a society wants to use them

opportunity cost

what you must give up to get an item

trade off

when you compare the cost with the benefit of doing something

marginal decisions

whether or not to do a bit more or a bit less of an activity m

marginal analysis

study of such decisions to do a bit more or a bit less of an activity

incentive

anything that offers a reward to people to change their behavior

interaction

my affect your choices, vice versa; feature of most economic situations

trade

provide goods and service to others and receive goods and service in return

gains from trade

ppl get more of what they want through trade than if they were self-sufficient

specialization

Different people engage in different tasks and specialize in tasks that they are good at performing

equilibrium

when no individual would be better off doing something different 

Anytime there's a change, the situation will move to an equilibrium

efficient

if takes all opportunities to make some people better off without making others worse off

equity

Everyone gets the fair share

internal validity

results accurate within study itself

external validity

can be generalized outside of study setting

normative view

analysis saying how world should work

positive view

analysis saying how the world is