Economics Vocabulary Terms

A complete set of vocabulary flashcards covering fundamental economics concepts, markets, supply and demand, and business structures from the lecture transcript.

scarcity

Limited resources compared to unlimited wants.

opportunity cost

The value of the next-best alternative you give up.

utility

The satisfaction or benefit you get from a good or service.

marginal analysis

Comparing the extra benefits and extra costs of a decision.

ceteris paribus

Assuming everything else stays the same.

want

Something you would like to have but do not need to survive.

need

Something necessary for survival or basic well-being.

income

Money earned from work, investments, or other sources.

land

Natural resources used to produce goods and services.

labor

Human effort used to produce goods and services.

capital

Human-made resources used to produce goods and services.

entrepreneur

A person who starts and runs a business while taking risks.

innovation

The creation or improvement of a product, service, or process.

input

A resource used to produce a good or service.

output

A good or service produced using inputs.

good

A physical item that satisfies a want or need.

service

An activity performed for someone that satisfies a want or need.

product

A good or service offered to consumers.

consumer goods

Goods bought for personal use.

capital goods

Goods used to produce other goods and services.

production

The process of creating goods and services.

competition

Rivalry between businesses trying to attract customers.

market

A system where buyers and sellers exchange goods or services.

efficiency

Using resources with as little waste as possible.

household

A person or group of people living together who make economic decisions.

business

An organization that produces and sells goods or services.

sole proprietorship

A business owned and operated by one person.

partnership

A business owned and operated by two or more people.

corporation

A business legally separate from its owners.

resource market

A market where businesses buy resources from households.

product market

A market where households buy goods and services from businesses.

creative destruction

The replacement of old products or businesses by new innovations.

demand

The amount of a good consumers are willing and able to buy at different prices.

income effect

A change in purchasing power caused by a change in price.

substitution effect

When consumers switch to a cheaper alternative after a price change.

complementary good

A good used together with another good.

substitute good

A good that can be used instead of another good.

supply

The amount of a good producers are willing and able to sell at different prices.

tax

A required payment to the government.

subsidy

Government financial support given to businesses or consumers.

equilibrium price

The price where quantity demanded equals quantity supplied.

equilibrium quantity

The amount bought and sold at equilibrium.

surplus

When quantity supplied is greater than quantity demanded.

price ceiling

A legal maximum price that can be charged.

price floor

A legal minimum price that can be charged.

producer

A person or business that makes goods or provides services.

consumer

A person or business that buys goods or services.

market failure

When a market fails to allocate resources efficiently.

externality

A cost or benefit of a transaction affecting someone not directly involved.

transaction

An exchange between a buyer and seller.

shortage

When quantity demanded is greater than quantity supplied.

firm

A business that produces goods or services.

plant

A physical location where production takes place.

industry

All firms that produce similar goods or services.

expenditure

Money spent on goods and services.

profit

Revenue minus the cost of producing goods or services.

private sector

The part of the economy owned and operated by individuals and businesses.

public sector

The part of the economy controlled by the government.

commodity

A basic, standardized good that can be bought and sold.