Economics Definitions

Three economic agents

consumers, producers and government

Economics

The study of real people making real choices in messy, real-world contexts- so certainty is much harder to achieve

Micro economics

The study of choices made by individual consumers and producers in specific markets.

Macro economics

The study of the economy as a whole - national performance, government policy and international.

Scarcity

Limited resources unable to satisfy unlimited wants

choice

Because resources are scares; decsions must be made between competing alternative. Every. choice has an opportunity cost.

Efficiency

Getting the most useful output from limited inputs, so resources aren’t wasted.

Equity

Fairness in how the benefits of economic activity are shared. (Not the same as equality.)

Economic wellbeing

More than income- includes scarcity, meeting basic needs and quality of life over time.

Sustainability

Meeting today’s needs without compromising future generations’ ability to meet theirs.

Change

The economic world constantly shifts- economist track change over time, not just fixed levels

Interdependence

No economic factor stands alone - households, firms, governments and nations all affect one another.

Intervention

Government action in markets used when markets alone fail to meet society’s goals.