Studied by 0 people
Looks like no one added any tags here yet for you.
Economic Problem
The decisions made to fulfill unlimited needs and wants with limited resources, creating scarcity.
Main Economic Agents
The three main decision makers in an economy: Government, Firms, and Individuals/Households.
Scarcity
The condition arising because resources are limited, preventing all needs and wants from being satisfied.
Basic Economic Questions
What will be produced? How will it be produced? For whom will it be produced?
Goods vs. Services
Goods are tangible items (e.g., pens), while services are non-tangible products (e.g., healthcare).
Needs vs. Wants
Needs are essential for survival, while wants are desires that are not necessary for survival.
Economic Goods
Goods that are limited in supply and scarce in relation to demand (e.g., oil, cars).
Free Goods
Goods that are unlimited in supply and available for everyone to use (e.g., air), with no opportunity cost.
Ceteris Paribus
A Latin phrase meaning 'all other factors remain unchanged'.
Price Elasticity of Demand (PED)
The responsiveness of quantity demanded to a change in price.
Law of Demand
Higher price leads to lower quantity demanded; lower price leads to higher quantity demanded.
Normal Goods
Goods for which demand increases as consumer income increases.
Inferior Goods
Goods for which demand decreases as consumer income increases.
Derived Demand
Demand for a good that results from the demand for another good.
Factors of Production
The resources used to produce goods and services: Land, Labor, Capital, and Enterprise.
Opportunity Cost
The value of the next best alternative foregone when a decision is made.
Production Possibility Curve (PPC)
A graph showing the maximum potential output of two goods in an economy.
Elastic vs. Inelastic Demand
Elastic demand (PED > 1) means quantity demanded changes more than price; inelastic demand (PED < 1) means quantity demanded changes less than price.
Market Economy
An economic system characterized by private enterprise and minimal government intervention.
Command Economy
An economic system where the central government plans and controls all economic activities.
Mixed Economy
An economic system that incorporates elements of both market and command economies.
Dynamic Pricing
Pricing strategy where prices are adjusted based on current market demands.
Positive vs. Normative Statements
Positive statements are objective and can be tested, while normative statements are subjective and based on opinions.
Primary Commodities
Raw materials produced from natural resources without manufacturing processes.
Manufactured Goods
Products created by processing raw materials into finished goods.
LEDC vs. MEDC
LEDC (Less Economically Developed Countries) often compete with MEDC (More Economically Developed Countries), which have more advanced technology.
Note 
Flashcard (33)