| A | B |
|---|
| The word economy comes from the Greek word for | one who manages a household |
| Economics deals primarily with the concept of | scarcity |
| Economics is defined as the study of | how society manages its scarce resources |
| The adage, there is no such thing as a free lunch, means | To get something we like, we usually have to give up another thinge we like |
| When society requires that firms reduce pollution | there is a tradeoff because of reduced incomes |
| Efficiency means | society is getting the most it can from its scarce resources |
| Equity means | The benefits of society's resources are distributed fairly among society's members |
| In economics, the cost of something is | what you give up to get it |
| Opportunity cost means | the value of the best opportunity given up |
| To make a decision at the margin | you must compare cost versus benefits |
| A marginal change | is a small incremental adjustment |
| A rational decision maker takes action | when marginal benefits exceed marginal costs |
| Economist believe that people will generally respond | to incentives |
| Trade | can make every nation better off |
| Markets | are a good way to organize economic activity |
| In a market economy, economic activity is guided by | prices |
| The term market failure refers to | a failure to allocate resources efficiently |
| A reason for government to intervene in a market | is to promote equity |
| An externality | is the impact of pollution from a factory |
| A market economy rewards | people on the basis of productivity |
| An example of a monopoly | a sole provider of electric power |
| Productivity detemines a countries | standard of living |
| Inflation is defined as | an increase in prices |
| Inflation is generally caused by | the printing of too much money |
| Inflation causes | the value of money to fall. |
