Ch.1
Cards
Consumer sovereignty
The ability of consumers to exercise complete control over what goods and services the economy produces by choosing what good and services to buy
Ceteris paribus
"everything else being equal"; allows economists to develop one-to-one cause and effect relationships removed from other potentially influential factors
Economics
study of how people work together to transform resources into goods and services to satisfy their wants, and how they distribute these goods among themselves
Microeconomics
looks at behavior of individual households and firms, and analyzes individuals as consumers and producers
Macroeconomics
focuses attention on the behavior of the economy as a whole
Firms
economic unit that produces goods in expectations of selling them to households, other firms, or government
Invisible hand
Adam Smith concept of the market- guides firms that seek only to satisfy their own self-interest to produce precisely those goods that consumers want
