Introduction To Economics 201516

Rational choice – Choosing the alternative that has the greatest value from among comparable quality products
indentured servant – A person who works without pay for a period of seven years to pay off a debt. The debt was usually coming to America.
stockholder – one who owns stock.
Absolute Advantage – The ability of an individual, firm, or country to produce more of a good or service than competitors using the same amount of resources.
Marginal Private Cost* – the cost of producing an additional unit of a good or service that is borne by the producer of that good or service
How does price act as a rationing function? – Resources are rationed by price, for example prices are raised in order to eliminate excess demand. The rising price reflects the strength of consumer preferences and consumers' ability to pay rations demand for the good
incentive – reward offered to try to persuade people to take certain economic actions
Bear Market – stock prices are falling
inflation rate – price index in year 2 – price index in year 1 / price index in year 1 * 100
Refer to Table 9. If the firms act out of individual self-interest, which prices will they select?
earned income – when someone makes a contribution to the production of goods and services and gets a payment as a result
Marginal cost – Cost of producing one more unit
Goods – Articles of trade or merchandise.
Right to a safe product, right to be informed, right to choose, right to be heard, right to redress – Consumer Bill of Rights
Refer tо Tаble 9. If the firms аct оut оf individuаl self-interest, which prices will they select?
Substitutes – Goods that can serve as replacements for one another, when the price of one increases, demand for the other increases.
Results of Monopolies – Brings it he highest long term profit of all market structures, prices are higher and output is low, output is not allocatively efficient`
Preferential trade agreement – An agreement between two or more countries to lower trade barriers between them on particular products, resulting in an easier access to the markets of other members for selected products, compared with the access of countries that are not members.
Q (arrwow down) income (arrow up) – Inferior
Implicit cost – input costs that do not require an outlay of money by the firm.

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