Choose a definition for each key term.

Key Terms Definitions

_3_ Scarcity 1. The property of distributing economic
prosperity uniformly among society’s members
__13__ Economics
2. A situation in which the market fails to allocate
__7__ Efficiency resources efficiently
3.
Limited resources and unlimited wants
__1__ Equality
4.
The amount of goods services produced from
__18__ Rational each unit of labor input
5.
__14__ Opportunity cost The case in which there is only one seller in the
market
__12__ Marginal change 6.
The principle that self-interested market
participants may unknowingly maximize the
__16__ Incentive
welfare of society as a whole
7.
__8__ Market economy The property of society getting the most from
8. its scarce resources
__17__ Property rights
An economic system where interaction of
__6__ “Invisible Hand” households and firms in markets determines
9. the allocation of resources
__2__ Market failure
Fluctuations in economic activity
10. When one person’s actions have an impact on a
__10__ Externality
bystander

__15__ Market power 11. An increase in the overall level of prices

__5__ Monopoly 12. An incremental adjustment to an existing plan

__4__ Productivity 13. Study of how society manages its

scarce resources
__11__ Inflation 14. Whatever is given up to get something else

__9__ Business cycle 15. The ability of an individual or

group to substantially influence market
prices
16. Something that induces a person to act

17. The ability of an individual to own and exercise control over scarce resources

18. Systematically and purposefully doing the best you can to achieve your objectives