ECON 160 VOCAB

Optimize

-make the best or most effective use of (a situation, opportunity, or resource)

-to make it as perfect, effective, or functional as possible

Scarcity

-the state of being scarce or in short supply; shortage

-does not just mean its running out, but that it is not free

The economy

• a mechanism of production, distribution, and consumption

• a system that coordinates production with choices about consumption and distributes goods and services to those who want them

A market

• allocates resources based on price and voluntary exchange

• a system of decentralized (controlled by many officers or authorities rather than just one) decisions by many firms and individuals

• a system of “high powered incentives” where control rights flow to those who value them most