The circular flow diagram is a diagram that views the economy as consisting of households and firms interacting in a goods and services market and a labor market.
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Fiscal policy refers to economic policies that involve money and interest rates.
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Scarcity is a situation when human wants for goods and services exceed the available supply.
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Macroeconomics is the branch of economics that focuses on broad issues such as growth, unemployment, inflation, and trade balance.
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Microeconomics is the branch of economics that focuses on actions of particular agents within the economy, like households, workers, and business firms.
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A price floor is a legal maximum price.
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An inferior good is a good in which the quantity demanded rises as income rises, and in which quantity demanded falls as income falls.
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Equilibrium price is the price where quantity demanded is equal to quantity supplied.
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Substitutes are goods that are often used together so that the consumption of one good tends to enhance consumption of the other.
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Tax incidence is the manner in which the tax burden is divided between buyers and sellers.
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Price elasticity of demand is defined as the percentage change in quantity demanded of a good or service divided by the percentage change in income.
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Explicit costs are out of pocket costs for a firm, for example, payments for wages and salaries, rent, or materials.
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Total cost is the sum of fixed and variable costs of production.
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A patent is a government rule that gives the inventor the exclusive legal right to make, use, or sell the invention for a unlimited time.
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A trademark is an identifying symbol or name for a particular good and can only be used by the firm that registered that trademark.
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Deregulation means to remove government controls over setting prices and quantities in certain industries.
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Collective bargaining refers to negotiations between unions and a firm or firms.
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Affirmative action refers to active efforts by government or businesses that give special rights to minorities in hiring, promotion, or access to education to make up for past discrimination.
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Positive externalities refer to beneficial spillovers to a third party or parties.
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Marginal utility is defined as the additional utility provided by one additional unit of consumption.
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