Macroeconomics--Hubbard and O'Brien Chapter 1
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1. scarcity: A situation in which unlimited wants exceed the limited resources avail-
able to fulfill those wants.
2. Economics: The study of the choices people make to attain their goals, given
their scarce resources.
3. Economic model: A simplified version of reality used to analyze real-world
economic situations.
4. Market: A group of buyers and sellers of a good or service and the institution or
arrangement by which they come together to trade.
5. Marginal analysis: Analysis that involves comparing marginal benefits and mar-
ginal costs.
6. Trade-off: The idea that because of scarcity, producing more of one good or
service means producing less of another good or service.
7. Opportunity cost: The highest-valued alternative that must be given up to en-
gage in an activity.
8. Centrally planned economy: An economy in which the government decides how
economic resources will be allocated.
9. Market economy: An economy in which the decisions of households and firms
interacting in markets allocate economic resources.
10. Mixed economy: An economy in which most economic decisions result from
the interaction of buyers and sellers in markets but in which the government plays a
significant role in the allocation of resources.
11. Productive efficiency: A situation in which a good or service is produced at the
lowest possible cost.
12. Allocative efficiency: A state of the economy in which production is in accor-
dance 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.
13. Voluntary exchange: A situation that occurs in markets when both the buyer
and seller of a product are made better off by the transaction.
14. Equity: The fair distribution of economic benefits.
15. Economic variable: Something measurable that can have different values, such
as the wages of software programmers.
16. Microeconomics: The study of how households and firms make choices, how
they interact in markets, and how the government attempts to influence their choices.
17. Macroeconomics: The study of the economy as a whole, including topics such
as inflation, unemployment, and economic growth.
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Study online at https://quizlet.com/_8c5tp
1. scarcity: A situation in which unlimited wants exceed the limited resources avail-
able to fulfill those wants.
2. Economics: The study of the choices people make to attain their goals, given
their scarce resources.
3. Economic model: A simplified version of reality used to analyze real-world
economic situations.
4. Market: A group of buyers and sellers of a good or service and the institution or
arrangement by which they come together to trade.
5. Marginal analysis: Analysis that involves comparing marginal benefits and mar-
ginal costs.
6. Trade-off: The idea that because of scarcity, producing more of one good or
service means producing less of another good or service.
7. Opportunity cost: The highest-valued alternative that must be given up to en-
gage in an activity.
8. Centrally planned economy: An economy in which the government decides how
economic resources will be allocated.
9. Market economy: An economy in which the decisions of households and firms
interacting in markets allocate economic resources.
10. Mixed economy: An economy in which most economic decisions result from
the interaction of buyers and sellers in markets but in which the government plays a
significant role in the allocation of resources.
11. Productive efficiency: A situation in which a good or service is produced at the
lowest possible cost.
12. Allocative efficiency: A state of the economy in which production is in accor-
dance 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.
13. Voluntary exchange: A situation that occurs in markets when both the buyer
and seller of a product are made better off by the transaction.
14. Equity: The fair distribution of economic benefits.
15. Economic variable: Something measurable that can have different values, such
as the wages of software programmers.
16. Microeconomics: The study of how households and firms make choices, how
they interact in markets, and how the government attempts to influence their choices.
17. Macroeconomics: The study of the economy as a whole, including topics such
as inflation, unemployment, and economic growth.
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