Phillips curve вЂ“ a curve that shows a short-run trade off between inflation and unemployment.Д¬omparative advantage and gains from trade Society faces a short-one trade off between inflation and unemployment

Inflation вЂ“ an increase in the overall level of prices in the economy.ДЎ0. Prices rise once a government brings too much money A countryвЂ™s standard of living depends on its ability to produce goods and servicesД©. Market power refers to the ability of single person.ДЁ. Example: externality.Д®xternality вЂ“ is the impact of one personвЂ™s actions of the well-being of a bystander Market failure вЂ“ situation in which the market on its own fails to allocate resources efficiently. Governments can sometimes improve market outcomes вЂќInvisible hand of the marketplaceвЂќ вЂ“ Adam Smith.Д§. вЂњAn inquiry into the nature and causes of the wealth of NationsвЂќ вЂ“ a book of Adam Smith 1776.

Market economy вЂ“ an economy that allocates resources through the decentralized decision of many firms and households as they interact in markets for good and services. Markets are usually a good way to organize economic activity.Д¬entral planning вЂ“ only the government could organize economic activity. The economy, as a whole, can produce more when each person specialize in a task and trades with each others.Д¦. This increase in output is due to specialization: each person specializes in the task that he is good at performing.

Cost price exhale by output