establish ownership and grant individuals the right to trade goods and services with each other.

the real cost of an item: what you must give up in order to get it.

a falling overall price level.

the technical means for producing goods and services.

illustrates the trade-offs facing an economy that produces only two goods; shows the maximum quantity of one good that can be produced for each possible quantity of the other good produced.

the alternation between economic downturns, known as recessions, and economic upturns, known as expansions.

rewards or punishments that motivate particular choices.

the quantity of goods and services produced.

all resources that come from nature, such as minerals, timber, and petroleum.

anything that can be used to produce something else.

when you give up something in order to have something else.

the study of scarcity and choice.

the branch of economics that studies how individuals, households, and firms make decisions and how those decisions interact.

indicate the rate at which one good can be exchanged for another.

the branch of economics that is concerned with the overall ups and downs of the economy.

the percentage of the labor force that is unemployed.

the number of people who are currently working for pay in the economy.

the branch of economic analysis that makes prescriptions about the way the economy should work.

the advantage conferred by an individual if the opportunity cost of producing the good or service is lower for that individual than for other people.

the branch of economic analysis that describes the way the economy actually works.

when the overall price level is changing only slowly if at all.

the effort of workers.

an economy in which the decisions of individual producers and consumers largely determine what, how, and for whom to produce, with little government involvement in the decisions.

Recessions are periods of economic downturns when output and employment are falling.

economic measures that summarize data across many different markets.

the number of people who are actively looking for work but aren’t currently employed.

the efforts of entrepreneurs in organizing resources for production, taking risks to create new enterprises, and innovating to develop new products and production processes.

the number of people who are either actively employed for pay or unemployed and actively looking for work; the sum of employment and unemployment.

a simplified representation used to better understand a real-life situation.

a very deep and prolonged downturn.

a period of economic upturn in which output and employment are rising; also referred to as recovery.

an increase in the maximum amount of goods and services an economy can produce.

the economy’s total production of goods and services for a given time period.

each person specializes in the task that he or she is good at performing.

describes a market or economy in which there is no way to make anyone better off without making at least one person worse off.

in short supply; when a resource is not available in sufficient quantities to satisfy all the various ways a society wants to use it.

a system for coordinating a society’s productive and consumptive activities.

manufactured goods used to make other goods and services.

in the development of a model, the assumption that all other relevant factors remain unchanged; also known as the ceteris paribus assumption.

an economy in which industry is publicly owned and a central authority makes production and consumption decisions.

an economic principle that states that people can get more of what they want through trade than they could if they tried to be self-sufficient; this increase in output is due to specialization.

the study of the costs and benefits of doing a little bit more of an activity versus a little bit less.

the advantage conferred by the ability to produce more of a good or service with a given amount of time and resources; not the same thing as comparative advantage.

achieved by an economy if it produces at a point on its production possibilities curve.

when individuals provide goods and services to others and receive goods and services in return.

achieved by an economy if it produces at the point along its production possibilities curve that makes consumers as well off as possible.

decisions by individuals about what to do, which necessarily involve decisions about what not to do.

a rising overall price level.