| A | B |
|---|
| scarcity | unlimited wants, limited supply |
| savings | what you have, but don't spend |
| opportunity cost | what must be given up by making a choice |
| rationality | people act in the way that benefits themselves |
| positive economics | statements about cause and effect |
| consumption | spending by households on goods and services, but not on new housing |
| normative economics | statements about what should be |
| Pareto efficiency | the only way to make someone better off is to make somebody else worse off |
| money | a medium of exchange, store of value, and unit of account |
| normal goods | a good or service for which demand is positively related to the buyer's income |
| inferior goods | a good for which demand is negatively related to income |
| substitutes | an increase in price for one means an increase in demand for the other |
| complements | a rise for price in one leads to a fall in demand for the other |
| equilibrium | where supply and demand meet |
| competitive markets | many and buyers and sellers trading an identical good or service |
| producer surplus | the difference between the price producers recieve and their marginal cost for producing it |
| total surplus | sum of consumer and producer surplus |
| elasticity | how much change in quantity demanded or supplies because of price |
| total revenue | the revenue recieved by a supplier |
| demand schedule | table showing relationship between price and quanity demanded |
