Lernmaterialien für Principles of Micronomics an der Universität Wien

whatever must be given up to obtain some item

By comparing marginal revenue and marginal cost: As long as marginal revenue exceed marginal cost, increasing the quantity produced raises profit. If marginal revenue is less than marginal cost is should decrease production. If the firm thinks at the margin and makes incremental adjustments to the level of production, it will end up producing the profit-maximizing quantity.

people who systematically and purposefully do the best they can to achieve their objectives

an economy that allocates resources through the decentralized decisions of many firms and household as they interact in markets for goods and services

the ability of an individual to own and exercise control over scarce resources

the study of how society manages its scare resources 

fluctuations in economic activity, such as measured by the production of goods and services or the number of people employed

the limited nature of society's resources 

The question of efficiency concerns whether the pie is as big as possible, the question of equality concerns how the pie is sliced and how the portions are distributed among members. 

the quantity of goods and services produced from each unit of labor input 

in all cases markets fail to allocate resources efficiently because property rights are not well established: Some item of value does not have an owner with the legal authority to control it. The "goods" of clean air or national defence is valubale, but no one has the right to attach a price to it and profit from its use.

When in absence of property rights causes market failure, the government can potentially solve the problem:It can help to define property rights and thereby unleash market forces(eg pollution permits).As in the provision of national defense the solution is for the government to use tax revenue supply a good that the market fails to supply.