Economics and Personal Finance Flashcards

Vocabulary flashcards covering core economics concepts including scarcity, factors of production, marginal analysis, and unintended consequences.

Economics

The study of how individuals and societies make choices when there is scarcity.

Scarcity

A condition that occurs when there are not enough resources to produce all the goods and services that people want.

Trade-offs

Decisions where you give up something to gain something else.

Opportunity Cost

The value of the next best alternative to the choice that was made.

Production Possibilities Curve

A graph used to illustrate a society's scarcity, trade-offs, and opportunity costs.

Factors of Production

The four types of scarce resources used to produce goods and services: land, labor, capital, and entrepreneurship.

Natural Resources

Land and naturally occurring things on and under the land, such as crops, water, and minerals.

Human Resources

The efforts that people make at work, as well as their talents and skills.

Capital Resources

Things used to produce other goods or services, like tools, machines, and buildings.

Financial Capital

Money used to buy capital resources, which is not itself considered capital in economics.

Entrepreneurship

The activity of coming up with an idea and starting a business—the enterprising factor that leads and organizes the other three factors from initial idea to finished product.

Entrepreneur

An enterprising person who has what it takes to lead a business from an idea all the way to a final product or service.

Marginal Decisions

Decisions that involve doing a little more of something or doing a little less of something.

Marginal Analysis

The process of comparing marginal benefits and marginal costs to identify the best choice.

Marginal Benefit

The additional benefit (or change in total benefit) resulting from an action.

Marginal Cost

The additional cost that results from taking an action.

Consequence

The result or the outcome of an action.

Unintended Consequences

Unexpected results that occur when an action leads to an outcome that was not intended.

Positive Unintended Consequence

An outcome that occurs when an action results in unexpected benefits.

Negative Unintended Consequence

An outcome that occurs when an action causes unexpected harm or has unexpected costs.