Economics 3.0

Economics

The social science concerned with the satisfaction of human wants and needs based on choices.

Microeconomics

The study of very specific economic issues involving individual firms, specific households, or specific products.

Macroeconomics

The study of the economy as a whole and its subdivisions, such as consumers, total output of firms, unemployment, and inflation.

Ceteris Paribus

A Latin phrase meaning "other things being equal" that assumes all things remain constant except the variables under consideration.

Economic Policy

Economic ideas applied to a nation to address specific problems or enhance the economy.

Causation Fallacies

Errors in reasoning where one event is assumed to cause another simply because it occurred before the other.

The Invisible Hand

A metaphor for the self-regulating nature of the marketplace, where individual self-interest leads to economic benefits for society.

Law of Demand

As price decreases, quantity demanded increases, and as price increases, quantity demanded decreases—an inverse relationship.

Diminishing Marginal Utility

The decrease in added satisfaction a consumer derives from each additional unit of a good purchased.

Supply Shifters

Factors that cause the supply curve to shift, such as resource prices, production techniques, taxes, and subsidies.

Market Equilibrium

The point where the supply and demand curves intersect, indicating a balance between the quantity supplied and quantity demanded.

Private Property

The ownership and use of property by individuals rather than the government.

Entrepreneurs

Individuals who create a supply for a demand by starting businesses and taking risks.

Labor Unions

Organizations formed by workers to negotiate for better working conditions and higher pay.

Medium of Exchange

Anything that is widely accepted in trade for goods and services.

Characteristics of Money

Durability, portability, limited supply, uniformity, divisibility, and acceptance.

Profit

The additional amount of money made after all economic costs have been paid; includes normal and pure profit.

Stock (Financial) Markets

Platforms where companies can sell portions of ownership (stocks) to investors.

Hostile Takeover

An acquisition in which the buyer purchases a company against the wishes of its management.

Free market

A free market is an economic system where prices for goods and services are determined by open competition between businesses, without government intervention.