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Scarcity
Society has unlimited wants and limited resources
Economics
The social science that studies the production, distribution, and consumption of goods and services.
Market Economy
When production and consumption of goods are the result of decentralized decisions by many firms and individuals.
Command Economy
There is a central authority making decisions about production and consumption. The type of economy in the USSR.
Invisible Hand
The way a market economy manages to harness the power of self-interest for the good of society.
Microeconomics
The study of how individuals make decisions and how these decisions interact.
Opportunity Cost
What you must give up in order to get an item you want.
Marginal Decisions
Decisions such as what you’ll do with your next hour or next dollar.
Trade-off
A comparison of the benefits and costs of two items/decisions.
Marginal Analysis
The study of decisions where one decides whether to do a bit more, or a bit less of an activity.
MC=MB
When the marginal cost is equal to the marginal benefit
Incentive
Anything that offers rewards for someone changing their behavior.
Trade
In a market economy, individuals engage in this. They provide goods and services to others and receive goods and services in return.
Specialization
Each person specializes in the task that he or she is good at.
Equilibrium
This is the case when no individual would be better off doing something else. Anytime there is change, the economy will move to a new equilibrium.
Efficient
When an economy takes all opportunities to make some people better off without making other people worse off.
Equity
Everyone gets his or her fair share
Note 
Flashcard (90)