Chapter 1 - Ten Principles of Economics

Incentive

________- something that reduces a person to act.

Pedestrians

________ are more likely to be found in car accidents because they have no added protection.

Rational people

________ make decisions by comparing costs and benefits, and they respond to incentives.

seat belts

Though ________ reduce deaths in car accidents, people are less cautious when driving.

Possible

________: market power- the ability of a single economic actor (or small group of actors) to have a substantial influence on market prices.

Households

________ and firms interacting in markets act as if they are guided by an "invisible hand "that leads them to desirable market outcomes.

productivity

Variation in living standards depends on a countrys ________.

Equality

________- the property of distributing economic prosperity uniformly among the members of society.

business cycle

The ________- fluctuations in economic activity (employment and production)

Inflation

________ occurs when a government creates large quantities of the nations currency, which leads to the fall of value in the currency.

Efficiency

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

scarce resources

The ability of an individual to own and exercise control over ________.

alternative choices

Making decisions requires comparing the costs and benefits of the ________.

overall level of spending

Increasing the amount of money in the economy stimulates the ________ and demand for goods and services.

unit of labor

The number of goods and services produced from each ________ input.

Rational people

________ often make decisions by comparing marginal benefits and marginal costs.