Economic Key Concepts

9 Key Economic Concepts

Scarcity, Efficiency, Sustainability, Intervention, Equity, Economic well-being, Interdependence, Choice, Change

Scarcity

The idea of there being not enough resources to be used to satisfy human needs and desires. Means that economists must make choices on who should get the resources and who should get what is produced.

Sustainability

The idea of using resources in a way that ensures that the needs of the current generation as well as the future generation are met. Must consider environmental treatment and resource usage impact as these could affect sustainability.

Intervention

Government gets involved in market operations to ensure that the market meets important economics concepts like efficiency, equity, economic well-being and sustainability.

Economic well-being

About the levels of prosperity, economic satisfaction and standards of living among members of society including security (of income, wealth, job, housing), productivity, quality life and being able to maintain these factors for a long time

Equity

About being fair and just. Relates to economics in terms of distributing income, wealth and human opportunities

Interdependence

The idea that economic decision makers all interact with each other and are reliant on each other. Consumers, workers, firms, governments and more depend on each other in order to achieve their economic goals and can make choices that have consequences on other economic decision makers.

Choice

About making decisions in economics about what needs to be produced and the consequences of that decision (links to opportunity cost) e.g. considering alternative options, present and future consequences

Change

Differences between two economic situations caused by changing variables. Includes also real world changes like technological differences, society, politics, cultures, environments, etc.

Efficiency

Maximizing production whilst reducing resource wastage

Allocative Efficiency

the standard of appropriately producing goods and services to mostly satisfy people's needs and wants while trying to minimize resource waste