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individual choice
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the decision by an individual of what to do, which necessarily involves a decision of what not to do
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resource
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anything, such as land, labor, and capital, that can be used to produce something else; includes natural resources and human resources
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scarce
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in short supply; not enough resources available to satisfy all the various ways a society wants to use them
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opportunity cost
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the real cost of an item; what you must give up in order to get it
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trade-off
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a comparison of costs and benefits of doing something
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marginal decision
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a decision made at the "margin" of an activity to do a bit more or a bit less of an activity
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marginal analysis
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the study of marginal decisions
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incentive
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anything that offers rewards to people who change their behavior
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interaction
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my choices affect your choices, and vice versa; results are often quite different from what the individuals intend
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trade
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in a market economy, individuals provide goods and services to others and receive goods and services in return
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gains from trade
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by dividing tasks and trading, people can get more of what they want than they could if they tried to be self-sufficient
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specialization
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each person specializes in the task that he or she is good at performing
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equilibrium
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an economic situation in which no individual would be better off doing something different
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efficient
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description of a market or economy that takes all opportunities to make some people better off without making other people worse off
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equity
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fairness; everyone gets his or her fair share; not as well defined a concept as efficiency
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