Economics Key Concepts: Scarcity, Efficiency, Market Failures, and Business Cycles

Scarcity

The limited availability of resources relative to society's unlimited wants.

Economics

The study of how society manages and allocates its scarce resources.

Efficiency

The optimal use of scarce resources to maximize output or benefits.

Equality

The uniform distribution of economic prosperity among society's members.

Opportunity Cost

The value of the next-best alternative given up when making a choice.

Rational People

Individuals who make decisions by systematically pursuing their objectives within constraints.

Marginal Change

A small incremental adjustment to an existing plan or action.

Incentive

A factor that motivates or influences a person's behavior or decisions.

Market Economy

An economic system where resources are allocated through decentralized decisions in markets.

Property Rights

The legal ability to own and control scarce resources.

Market Failure

A situation where markets fail to allocate resources efficiently on their own.

Externality

The unintended impact of one person's actions on the well-being of others.

Market Power

The ability of an individual or group to significantly influence market prices.

Productivity

The amount of goods and services produced per unit of labor input.

Inflation

A sustained increase in the overall price level of goods and services in the economy.

Business Cycle

The recurring fluctuations in economic activity, including periods of expansion and contraction.