Macroeconomics (Chapter 1 and 2)

the limited nature of society’s resources

the study of how society manages its scarce resources

the property of society getting the most it can from its scarce resources

the property of distributing economic prosperity uniformly among members of society

whatever must be given up to obtain some item

people who systematically and purposefully do the best they can to achieve their objectives

small incremental adjustments to an existing plan of action
(marginal benefit – diamonds)(marginal cost – bag of peanuts and pop for a standby passenger)

something that induces a person to act

an economy that allocates resources through the decentralized decisions of many firms and households as they interact in markets for goods and services

the ability of an individual to own and exercise control over scarce resources (a restaurant will not sell food if customers won’t pay)

a situation in which a market left on its own fails to allocate resources efficiently (a company cannot produce enough to get to customers)

the impact of one person’s actions on the well-being of a bystander

the ability of a single economic actor (for small group of actors) to have a substantial influence on market prices (competition – monopolies)

the quantity of goods and services produced from each unit of labor imput

an increase in the overall level of prices in the economy

fluctuations in economic activity, such as employment and production

a visual model of the economy that shows how dollars flow through markets among households and firms

a graph that shows the combinations of output that the economy can possibly produce given the available factors of production and the available production technology

the study of how households and firms make decisions and how they interact in markets

the study of economy-wide phenomena, including inflation, unemployment, and economic growth

claims that attempt to describe the world as it is

claims that attempt to prescribe how the world should be