Intro to Econ Definitions

Demand

The quantity of a good or service that consumers are willing and able to buy at various prices during a specific period

Supply

Supply refers to the quantity of a good or service that producers are willing and able to offer for sale at various prices during a given period.

Scarcity

The situation in which available resources/ factors of production are finite, whereas wants are infinite.

Sustainable development

development that meets the needs of the present without sacrificing the ability of future generations to meet their own needs.

Opportunity Cost

refers to the value of the next best alternative forgone when a decision is made. It represents the benefits that could have been gained from choosing an alternative option.

efficiency

making the best possible use of scarce resources to avoid resource waste

Equity

the idea of being just; equality of income, wealth, and human opportunity distribution

interdependence

economic decision-makers interact with and depend on each other, all economic decision impact each other

Intervention (Government)

government getting involved with the market that change the allocation of resources and distribution of output and income from what markets would achieve on their own made through government commands

resource allocation

assigning available resources/ factors of production to specific uses chosen among many possible alternatives

reallocation

decision to change amounts of goods produced

overallocation

the production of too many of the “wrong” goods/resources relative to what is socially desirable

underallocation

the production of too few goods/services relative to what is socially desirable

Distribution of output

how much output different individuals or groups in the population receives

Distribution of income

how much income individuals or groups in a population receive

redistribution of income

when the distribution of income/output changes so different social groups receive more or less income/output than before

Productive Efficiency

highest output using all available resources

Economic Growth

occurs when there is an increase in the productive potential of an economy (outward shift of PPC)

Marginal Utility

the additional utility gained from the consumption of an additional product. Total utility increases with additional unties, but the marginal utility falls.

Utility

a measure of satisfaction or usefulness a consumer receives when they consume a product

Fiscal Policy

use of government spending and tax to influence the economy and reach macroeconomic goals (used to stabilize an economy during a recession or depression)

monetary policy

adjustment of interest rates and money supply to influence aggregate demand