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14 Cards in this Set

  • Front
  • Back
What does scarcity cause people to do?
make choices
Define opportunity cost?
The next best alternative use of time, money or resources
define marginal cost
cost associated with Producing one additional unit of something
define monetary incentive
When the boss pays you money or buys you something if you reach a certain goal
Who protects private property in a market economy?
The government
What did Adam Smith believe about a Free Market Economy?
That people must pursue their own self interest
Define Adam Smith's theory of the invisible hand?
When people pursue the own self interest it results in the lowest prices and the best goods
Define substitute good?
A good that people when the price is lower than the good they usually buy, Tylenol vs generic brand
What is the law of demand?
demand will rise when prices decrease and demand will decrease when prices increase
What must happen in order for demand to increase?
Buyers must be willing to buy and be able to afford it
What happens to the price if demand is high and supply is low
Price is high or increases
define equilibrium price
The price where supply and demand meet on a demand curve
What is the result of price controls?
demand increases and supply decreases
Why are price ceilings instituted?
to protect consumers