Untitled Flashcards Set

Economics

The study of how individuals and societies allocate scarce resources among competing uses.

Microeconomics

The branch of economics that studies individual agents, such as households and firms, and how they make decisions.

Macroeconomics

The branch of economics that focuses on the behavior and performance of an economy as a whole, including issues like inflation, unemployment, and economic growth.

Factors of Production

The resources used to produce goods and services, commonly categorized as land, labor, capital, and entrepreneurship.

Human Capital

The skills, knowledge, and experience possessed by an individual or population, viewed in terms of their value to an organization or economy.

Opportunity Cost

The loss of potential gain from other alternatives when one alternative is chosen.

Production Possibilities Frontier (PPF)

A graph that depicts the maximum possible output combinations of two goods or services that can be produced in an economy, given available resources.

Economic Growth and PPF

Economic growth shifts the PPF outward, increasing the potential output of goods and services.

Comparative Advantage

The ability of an individual or group to carry out a particular economic activity more efficiently than another activity.

Absolute Advantage

The ability of an individual or group to carry out a particular economic activity more efficiently than another individual or group.

Demand

The quantity of a good or service that consumers are willing and able to purchase at various prices.

Law of Demand

As the price of a good falls, the quantity demanded rises, and vice versa, all else being equal.

Shifters of Demand

Factors that cause the demand curve to shift; these include changes in consumer income, preferences, prices of related goods, and expectations.

Supply

The total amount of a good or service that producers are willing and able to sell at various prices.

Law of Supply

As the price of a good rises, the quantity supplied increases, and vice versa, all else being equal.

Shifters of Supply

Factors that cause the supply curve to shift; these include changes in production costs, technology, number of sellers, and expectations.

Equilibrium in Demand-Supply Model

The point at which the quantity demanded equals the quantity supplied, determining the market price.

Shortage

A situation where demand exceeds supply at a given price, typically represented below the equilibrium point on a graph.

Surplus

A situation where supply exceeds demand at a given price, typically represented above the equilibrium point on a graph.

Changes in Equilibrium

Adjustments in the market equilibrium point occur when demand, supply, or both shift, affecting the equilibrium price and quantity.