1.6 KEY TERMS

image | interactive activity

Match each of the terms on the left with its definition on the right. Click on the term first and then click on the matching definition. As you match them correctly they will move to the bottom of the activity.

Question

Economy
Economics
Market economy
Invisible hand
Microeconomics
Market failure
Recession
Macroeconomics
Economic growth
Individual choice
Resource
Scarce
Opportunity cost
Trade-off
Marginal decisions
Marginal analysis
Incentive
Interaction
Trade
Gains from trade
Specialization
Equilibrium
Efficient
Equity
the real cost of an item: what you must give up in order to get it.
a comparison of the costs and benefits of doing something.
the social science that studies the production, distribution, and consumption of goods and services.
when individuals provide goods and services to others and receive goods and services in return.
an economic principle that states that by dividing tasks and trading, people can get more of what they want through trade than they could if they tried to be self-sufficient.
refers to the way in which the individual pursuit of self-interest can lead to bad results for soci- ety as a whole.
in short supply; a resource is scarce when there is not enough of the resource available to satisfy all the various ways a society wants to use it.
fairness; everyone gets his or her fair share. Since people can disagree about what's “fair,” equity isn't as well defined a concept as efficiency.
a system for coordinating society’s productive activities.
an economic situation in which no individual would be better off doing something different.
the study of marginal decisions.
refers to the way in which the individual pursuit of self-interest can lead to good results for society as a whole.
the decision by an individual of what to do, which necessarily involves a decision of what not to do.
describes a market or economy that takes all opportunities to make some people better off without making other people worse off.
anything, such as land, labor, and capital, that can be used to produce something else.
the growing ability of the economy to produce goods and services.
(of choices) my choices affect your choices, and vice versa; a feature of most economic situations. The results of this interaction are often quite different from what the individuals intend.
a period of economic downturn when output and unemployment are falling; also referred to as a contraction.
the branch of economics that is concerned with the overall ups and downs in the economy.
an economy in which decisions about production and consumption are made by individual producers and consumers.
anything that offers rewards to people who change their behavior.
a situation in which different people each engage in the different task that he or she is good at performing.
a decision made at the “margin” of an activity to do a bit more or a bit less of that activity.
the branch of economics that studies how people make decisions and how those decisions interact.