Principles of Microeconomics
Study online at https://quizlet.com/_japfda
1. Scarcity society has limited resources and therefore can-
not produce all the goods and services people
wish to have
2. Economics the study of how society manages its scarce re-
sources
3. Efficiency society is getting the maximum benefits from its
scarce resources
4. Equality benefits are distributed uniformly among soci-
ety's members
5. opportunity cost the cost of an item that is what you give up to get
that item
6. rational people people who systematically and purposefully do
the best they can to achieve their objectives, giv-
en the available opportunities
7. marginal change describes a small incremental adjustment to an
existing plan of action
8. market economy the decisions of a central planner are replaced by
the decisions of millions of firms and households
9. Firms decide who to hire and what to make
10. Households decide which firms to work for and what to buy
with their incomes
11. property rights what market economies need in order so that
individuals can own and control scarce resources
, Principles of Microeconomics
Study online at https://quizlet.com/_japfda
12. market failure refers to a situation in which the market on its
own fails to produce and efficient allocation of
resources
13. externality the impact of one person's actions on the well-
being of a bystander
14. market power the ability of a single person or firm (or a small
group) to unduly influence market prices
15. productivity the amount of goods and services produced by
each unit of labor input
16. inflation an increase in the overall level of pries in the
economy
17. business cycle the irregular and largely unpredictable fluctua-
tions in economic activity, as measured by the
production of goods and services or the number
of people employed
18. circular-flow diagram
19. productions possibilities frontier a graph that shows the various combinations of
output that the economy can possibly produce
given the available factors of production and the
available production technology that firms use to
turn these factors into output
, Principles of Microeconomics
Study online at https://quizlet.com/_japfda
20. Microeconomics the study of how households and firms make de-
cisions and how they interact in specific markets
21. Macroeconomics the study of economy-wide phenomena
22. Positive statements descriptive statements that make a claim about
how the world is
23. Normative statements prescriptive statements making a claim about
how the world ought to be
24. absolute advantage Used when comparing the productivity of one
person, firm, or nation to that of another. The
producer that requires a smaller quantity of in-
puts to produce a good is said to have an ab-
solute advantage in producing that good
25. comparative advantage describing the opportunity costs faced by two
producers
26. Imports goods produced abroad and sold domestically
27. Exports goods produced domestically and sold abroad
28. Market a group of buyers and sellers of a particular
good or service
29. Competitive market a market in which there are so many buyers and
so many sellers that each has a negligible impact
on the market price
30. Quantity demanded the amount of a good that buyers are willing and
able to purchase
Study online at https://quizlet.com/_japfda
1. Scarcity society has limited resources and therefore can-
not produce all the goods and services people
wish to have
2. Economics the study of how society manages its scarce re-
sources
3. Efficiency society is getting the maximum benefits from its
scarce resources
4. Equality benefits are distributed uniformly among soci-
ety's members
5. opportunity cost the cost of an item that is what you give up to get
that item
6. rational people people who systematically and purposefully do
the best they can to achieve their objectives, giv-
en the available opportunities
7. marginal change describes a small incremental adjustment to an
existing plan of action
8. market economy the decisions of a central planner are replaced by
the decisions of millions of firms and households
9. Firms decide who to hire and what to make
10. Households decide which firms to work for and what to buy
with their incomes
11. property rights what market economies need in order so that
individuals can own and control scarce resources
, Principles of Microeconomics
Study online at https://quizlet.com/_japfda
12. market failure refers to a situation in which the market on its
own fails to produce and efficient allocation of
resources
13. externality the impact of one person's actions on the well-
being of a bystander
14. market power the ability of a single person or firm (or a small
group) to unduly influence market prices
15. productivity the amount of goods and services produced by
each unit of labor input
16. inflation an increase in the overall level of pries in the
economy
17. business cycle the irregular and largely unpredictable fluctua-
tions in economic activity, as measured by the
production of goods and services or the number
of people employed
18. circular-flow diagram
19. productions possibilities frontier a graph that shows the various combinations of
output that the economy can possibly produce
given the available factors of production and the
available production technology that firms use to
turn these factors into output
, Principles of Microeconomics
Study online at https://quizlet.com/_japfda
20. Microeconomics the study of how households and firms make de-
cisions and how they interact in specific markets
21. Macroeconomics the study of economy-wide phenomena
22. Positive statements descriptive statements that make a claim about
how the world is
23. Normative statements prescriptive statements making a claim about
how the world ought to be
24. absolute advantage Used when comparing the productivity of one
person, firm, or nation to that of another. The
producer that requires a smaller quantity of in-
puts to produce a good is said to have an ab-
solute advantage in producing that good
25. comparative advantage describing the opportunity costs faced by two
producers
26. Imports goods produced abroad and sold domestically
27. Exports goods produced domestically and sold abroad
28. Market a group of buyers and sellers of a particular
good or service
29. Competitive market a market in which there are so many buyers and
so many sellers that each has a negligible impact
on the market price
30. Quantity demanded the amount of a good that buyers are willing and
able to purchase
