Microeconomics Exam 1 Vocabulary

A state of the economy in which production is in accordance with consumer preferences; in particular, every good or service is produced up to the point where the last unit provides a marginal benefit to socity equal to the marginal cost of producing it.

An economy in which the government decides how economic resources will be allocated.

A simplified version of reality used to analyze real-world economic situations.

Something measurable that can have different values, such as the wages of software programmers.

The study of the choices people make to attain their goals, given their scarce resources.

The fair distribution of economic benefits.

The study of the economy as a whole, including topics such as inflation, unemployment, and economic growth.

Analysis that involves comparing marginal benefits and marginal costs.

A group of buyers and sellers of a good or service and the institution or arrangement by which they come together to trade.

An economy in which the decisions of households and firms interacting in markets allocate economic resources.

The study of how households and firms make choices, how they interact in markets, and how the government attempts to influence their choices.

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.

Analysis concerned with what ought to be.

The highest-valued alternative that must be given up to engage in an activity.

Analysis concerned with what is.