Introduction to Economics Lecture Notes

Vocabulary flashcards covering key terms from the Introduction to Economics lecture.

Economics

The study of choice under conditions of scarcity.

Scarcity

The condition in which our wants exceed the limited resources available to satisfy them.

Trade-off

The act of giving up one thing to obtain another because resources are limited.

Opportunity Cost

The value of what is given up when an action or choice is made, including both explicit and implicit costs.

Explicit Cost

A direct, out-of-pocket monetary payment associated with a decision.

Implicit Cost

The value of resources sacrificed when no direct monetary payment is made, such as time or forgone income.

Forgone Income

Earnings that are sacrificed by choosing one alternative over another; an implicit cost.

Rational People

Individuals who systematically and purposefully do the best they can to achieve their objectives, avoiding knowingly harmful choices.

Marginal

Additional or incremental; used to describe small changes to a plan of action.

Marginal Thinking

The process of comparing marginal benefits with marginal costs to make decisions.

Marginal Benefit

The additional benefit received from consuming or producing one more unit of a good or undertaking one more action.

Marginal Cost

The additional cost incurred from consuming or producing one more unit of a good or undertaking one more action.

Cost-Benefit Analysis

A systematic comparison of marginal benefits and marginal costs to guide decision making.

Microeconomics

The branch of economics that studies the behavior of individual households, firms, and governments.

Macroeconomics

The branch of economics that studies the behavior and performance of the economy as a whole.