Economics: Scarcity, Opportunity Cost, and Basic Concepts

A set of vocabulary flashcards based on intro economics lecture notes, covering core definitions such as scarcity, factors of production, opportunity cost, microeconomics, macroeconomics, and basic assumptions.

Rationally Self-Interested

The economic assumption that people seek to maximize their utility ("happy points").

Decision at the Margin

A decision-making process where individuals weigh the marginal benefit against the marginal cost of a decision.

Ceteris Paribus

An assumption where economists hold factors constant, except for what is being considered.

Needs

Necessities required for survival.

Wants

Goods and services consumed beyond what is necessary for survival.

Utility

A term used by economists for the measurement of "usefulness" or "satisfaction" a consumer obtains from any good or service.

Economics

The study of choices people make to satisfy their needs and wants.

Microeconomics

The study of how individuals and firms deal with scarcity.

Macroeconomics

The study of how society as a whole deals with scarcity.

Goods

Physical objects that can be purchased.

Services

Actions or activities performed for a fee.

Consumers

People who purchase goods and services, motivated to maximize utility ("satisfaction").

Producers

People who supply goods and services, motivated to maximize profits.

Three Economic Questions

The questions every society must answer: 1. What goods and services should be produced? 2. How goods and services should be produced? 3. Who consumes the goods and services?

Land

A factor of production consisting of natural resources.

Labor

A factor of production consisting of human work.

Capital

A product of investment comprising tools, machines, factories, or any man-made good used to produce another good or provide a service.

Entrepreneurship

The special ability of risk-takers to combine land, labor, and capital in new ways in order to make profit.

Scarcity

The fundamental problem of economics where people have unlimited wants but the resources to satisfy those wants are scarce.

Opportunity Cost

The value of the next-best alternative given up when making a choice, representing the potential benefit missed by not choosing another option.

TINSTAAFL

An acronym standing for "There is no such thing as a free lunch," signifying that everything has a cost and an opportunity cost is always incurred.