Every field of study has its own terminology Mathematics axioms integrals vector spaces Psychology

Economy. . . . . . The word economy comes from a Greek word for “one who manages a household

Harcourt, Inc. items and derived items copyright © 2001 by Harcourt, Inc. Interdependence and Trade Consider your typical day: You wake up to an alarm clock made in Korea. You pour yourself some orange juice made from oranges grown in Florida. You put on some clothes made of cotton grown in Georgia and sewn in factories in Thailand. You watch the morning news broadcast from New York on your TV made in Japan

The Market Forces of Supply and Demand Supply and demand are the two words that economists use most often. Supply and demand are the forces that make market economies work. Modern microeconomics is about supply, demand, and market equilibrium

Elasticity . . . … is a measure of how much buyers and sellers respond to changes in market conditions … allows us to analyze supply and demand with greater precision

In a free, unregulated market system, market forces establish equilibrium prices and exchange quantities. While equilibrium conditions may be efficient, it may be true that not everyone is satisfied

Do the equilibrium price and quantity maximize the total welfare of buyers and sellers? Market equilibrium reflects the way markets allocate scarce resources. Whether the market allocation is desirable is determined by welfare economics

The Costs of Taxation How do taxes affect the economic well- being of market participants?

International Trade What determines whether a country imports or exports a good?

Market Efficiency - Market Failures Recall that: Adam Smith’s “invisible hand” of the marketplace leads self￾interested buyers and sellers in a market to maximize the total benefit that society can derive from a market