Economics Chapter 1

3. __________ economy- an economy where economic decisions are passed down from government authority and where the government owns the resources.
5. shows how households and firms interact in the goods and services market and in the labor market.
6. the way in which different workers divide required tasks to produce a good or service.
8. Factors that motivate people to act or exert effort.
10. Unintended ___________: a negative indirect incentive.
12. ___________ economy- an economy where economic decisions are decentralized, private individuals own resources, and businesses supply goods and services based on demand.
13. the goods and services that are produced abroad and then sold domestically.
15. focuses on the actions of individual agents within the economy, like households, workers, and businesses.
16. ________ incentives: Discouraging undesired behavior through penalties.
20. __________ economy - typically an agricultural economy where things are done the same as they have always been done.
21. measures the size of total production in an economy.

1. when workers or firms focus on particular tasks for which they are well-suited within the overall production process.
2. is the study of how humans make decisions in the face of scarcity.
4. the branch of economics that focuses on broad issues such as growth, unemployment, inflation, and trade balance.
7. human wants for goods, services, and resources exceed what is available.
9. the trend in which buying and selling in markets have increasingly crossed national borders.
11. ______ Incentives: Encouraging desired behavior through rewards.
14. lack of incentive to guard against risk where one is protected from its consequences, e.g. by insurance.
17. the goods and services that a nation produces domestically and sells abroad.
18. _________ Incentives: A secondary change in behavior brought on by an action.
19. ________ Incentives: A direct incentive is an action taken with the objective of causing another action.