Econ 102 example #8828

the property of society getting the most it can from its scarce resources.

the property of distributing economic prosperity evenly among the members of society.

Whatever must be given up to obtain some item

incremental, additional

a small incremental adjustment to an existing plan of action

centrally planned economies and market economies

In a market economy, decisions are guided by prices and individual self-interest. In a centrally planned economy, economic activity is guided by the government.

A situation in which the market on its own fails to produce an efficient allocation of resources.

Externality and market power

The impact of one person's actions on the well-being of a bystander; pollution

The ability of a single person to have a substantial influence on market prices

An increase in the overall level of prices in the economy

fluctuations in economic activity, such as employment and production.

A model that shows how dollars flow through markets among households and firms

own the factors of production, and buy all the goods and services that firms produce.

1. Substitution bias 2. Introduction of new goods 3. Unmeasured quality change

1. Survey consumers to determine a fixed basket of goods 2. Find the price for each good 3. Calculate the cost of a basket of goods for each period 4. Calculate the consumer price index 5. Calculate the inflation rate

GDP Deflator

the amount of goods and services produced for each hour of a worker's time. It is linked to a nation's economic policies.

real GDP per person

(quantity of output)/(number of hours worked)

the amount of goods and services produced from each hour of a worker's time, i.e. productivity.

the value of all final goods and services produced within a country in a given period of time.

add up the market values of all final goods and services