Analysis that involves comparing marginal benefits and marginal costs
A state of the economy in which production is in accordance with consumer preferences; in particular, every good or service is produced up to the point where the last unit provides a marginal benefit to society equal to the marginal cost of producing it.
A situation in which a good or service is produced at the lowest possible cost.
The study of how households and firms make choices, how they interact in markets, and how the government attempts to influence their choices.
The study of the economy as a whole, including topics such as inflation, unemployment, and economic growth.
The fair distribution of economic benefits
Normative vs postive
normative=what should be, positive= what is
Production possibilities frontier-
A curve showing the maximum attainable combinations of two products that may be produced with available resources and current technology.
The ability of an individual, a firm, or a country to produce a good or service at a lower opportunity cost than competitors.
The ability of an individual, a firm, or a country to produce more of a good or service than competitors, using the same amount of resources.
A curve that shows the relationship between the price of a product and the quantity of the product demanded.
Law of demand-
The rule that, holding everything else constant, when the price of a product falls, the quantity demanded of the product will increase, and when the price of a product rises, the quantity demanded of the product will decrease
The change in the quantity demanded of a good that results from the effect of a change in the good’s price on consumers’ purchasing power.
Ceteris paribus- (“all else equal”) condition
The requirement that when analyzing the relationship between two variables—such as price and quantity demanded—other variables must be held constant.
A table that shows the relationship between the price of a product and the quantity of the product supplied.