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Tradeoffs
Concept of scarcity requiring choices between alternatives.
Opportunity Cost
Value of the best alternative forgone.
Marginal Costs
Additional cost of producing one more unit.
Marginal Benefits
Additional benefit from consuming one more unit.
Incentives
Factors that motivate individuals to make decisions.
Mutually Beneficial Trade
Exchange where all parties gain from trade.
Market Coordination
Markets efficiently allocate resources through price signals.
Market Failure
Inefficiencies in market outcomes requiring government intervention.
Productivity
Key determinant of living standards in an economy.
Microeconomics
Study of individual consumers and firms in markets.
Macroeconomics
Study of the economy as a whole.
Comparative Advantage
Ability to produce at a lower opportunity cost.
Absolute Advantage
Ability to produce more of a good than others.
Production Possibility Frontier (PPF)
Graph showing maximum feasible production combinations.
Outward PPF Shift
Indicates economic growth or increased resources.
Inward PPF Shift
Indicates economic decline or reduced resources.
Price Signals
Information conveyed by prices guiding economic decisions.
Property Rights
Legal rights to use and manage resources.
Economic Models
Simplified representations to explain economic phenomena.
Efficiency vs. Equity
Efficiency maximizes output; equity ensures fairness.
Circular Flow Diagram
Visual representation of economic interactions and flows.
