Glossary+-+Sally+B.

Chapter 1

 * 1) Scarcity:** the limited resource
 * 2) Economics:** study that deals with scarce resources
 * 3) Efficiency:** getting the maximum out of the scarce resource
 * 4) Equity:** distributing economic prosperity fairly among the members of society
 * 5) Opportunity cost:** value of the item that you gave up for something else
 * 6) Rational people:** people who do their best to achieve their objectives
 * 7) Marginal changes:** small incremental adjustments
 * 8) Incentive:** something that induces a person to act
 * 9) Market economy:** an economy in which firms and households make decisions in a market
 * 10) Market failure:** a situation when the market fails to allocate resources efficiently
 * 11) Externality:** impact of one's actions on the bystander; ex) pollution
 * 12) Property rights:** the ability of an individual to control the scarce resource
 * 13) Market power:** single economic actor having a total influence on the market price
 * 14) Productivity:** quantity of goods and services produced from each hour
 * 15) Inflation:** increase in overall price
 * 16) Business cycle:** fluctuations in economic activity

Chapter 5

 * 1) Elasticity:** responsiveness of quantity demanded or quantity supplied to one of its determinants
 * 2) Price Elasticity of Demand:** how much quantity demanded of a good responds to a __change__ in price
 * 3) Total Revenue:** amount paid by buyers and received by sellers; P (price) x Q (quantity)
 * 4) Income Elasticity of Demand:** how much quantity demanded of a good responds to a __change__ in income
 * 5) Cross-Price Elasticity of Demand:** how much quantity demanded of one good responds to __change__ in price of another good
 * 6) Price Elasticity of Supply:** how much quantity supplied of a good responds to a __change__ in price

Chapter 9

 * 1) World Price:** price that prevails throughout the world market
 * 2) Tariff:** tax on imported goods

Chapter 13

 * 1) Total Revenue (TR):** amount paid by buyers and received by sellers; P x Q
 * 2) Total Cost (TC):** value of all the firm's inputs
 * 3) Profit:** TR - TC
 * 4) Explicit Cost:** input costs that require an outlay of money
 * 5) Implicit Cost:** input costs that do not require an outlay of money; opportunity cost
 * 6) Economic Profit:** TR - (Explicit cost + Implicit cost)
 * 7) Accounting Profit:** TR - Explicit cost
 * 8) Production Function:** the relationship between quantity of input and output
 * 9) Marginal Product (MP):** increase in output due an additional unit of input; = ∆TR / ∆Q
 * 10) Diminishing Marginal Product:** marginal product declines as the input increases
 * 11) Fixed Costs (FC):** costs that do not vary with the quantity of output
 * 12) Variable Costs (VC):** costs that vary with the quantity of output
 * 13) Average Total Cost (ATC) =** TC / Q
 * 14) Average Fixed Cost (AFC) =** FC / Q
 * 15) Average Variable Cost (AVC) =** VC / Q
 * 16) Marginal Cost (MC):** increase in total cost due to an extra unit of production; = ∆TC / ∆Q
 * 17) Efficient Scale:** lowest point (minimum) of ATC
 * 18) Economies of Scale:** Long Run (LR) ATC falls as the quantity of output increases
 * 19) Diseconomies of Scale:** LR ATC rises as the quantity of output increases
 * 20) Constant Returns to Scale:** LR ATC stays the same as the quantity of output increases

Chapter 17

 * 1) Monopolistic Competition:** a market where many firms sell products that are similar but not identical