Unit 1: Economics

Incentive

something to motivate people

Opportunity Cost

cost refers to the value of the next best alternative that is forgone when making a decision.

Scarcity

A fundamental economic problem arising from limited resources and unlimited wants, leading to the necessity of making choices.

Cost Benefit analysis/ Marginalism

A decision-making process that compares the costs and benefits of different choices, helping to determine the most advantageous option.

Factors of Products

owner, tool, firm, land, labor to make the basic requirements to produce a good/service

Production Possibilities Curve

A graphical representation that shows the maximum possible output combinations of two goods or services that can be produced with available resources and technology.

Supply Curve

A graphical representation showing the relationship between the price of a good or service and the quantity supplied by producers at various price points.

Demand Curve

A graphical representation showing the relationship between the price of a good or service and the quantity demanded by consumers at various price points.

Marketplace

The arena in which buyers and sellers interact to exchange goods and services, determining prices through supply and demand.

Prices

The amounts of money required to purchase goods or services, influenced by supply and demand dynamics.

Equilibrium

The point at which the quantity of a good or service demanded by consumers equals the quantity supplied by producers, resulting in a stable market price.

Market Regulation

The rules and laws put in place by the government to control how markets operate, ensuring fair competition and protecting consumers.

Regulation agency

An organization established by the government to enforce laws and guidelines that govern specific industries, ensuring compliance and protecting public interests.

Monopoly

A market structure where a single seller dominates the market, controlling supply and prices, often leading to reduced competition.

Antitrust

laws designed to promote competition and prevent monopolies in the marketplace.

Price ceiling

A legal maximum price that can be charged for a good or service, intended to protect consumers from high prices.

Price Floor

A legal minimum price that must be charged for a good or service, aimed at ensuring producers receive a fair income.

Comparative Advantage

The ability of a party to produce a good or service at a lower opportunity cost than another party, leading to more efficient production and trade.

Absolute Advantage

The ability of a party to produce more of a good or service than another party using the same amount of resources, indicating greater efficiency in production.

Specialization

The process in which individuals or groups focus on producing a limited range of goods or services to gain greater efficiency and expertise.