Introduction to Economics: Key Concepts and Principles

These flashcards cover key economic concepts introduced in the lecture, providing definitions and explanations relevant to understanding the basics of economics.

Economics

The study of how people and groups use their limited supplies to get all the things they want.

Adam Smith

A Scottish thinker known as the 'father of modern economics.' He wrote 'The Wealth of Nations'.

Scarcity

When there isn't enough of something to satisfy everyone's wants.

Opportunity Cost

What you give up when you choose one thing over another.

Positive Economics

The part of economics that explains how the economy actually works and what is happening.

Normative Economics

The part of economics that talks about how the economy should be, often involving opinions on what policies are best.

Cost-Benefit Analysis

A way to compare what something will cost versus what you will gain from it, to see if it's a good idea.

Incentives

Things that encourage people to do something or make a choice.

Trade-offs

When you choose one thing, you have to give up something else.

Market

Any place or system where buyers and sellers meet to trade goods and services.

Marginal Utility

The extra happiness or benefit you get from using one more item.

Production Possibilities Frontier (PPF)

A graph showing the most of two products a country can make with its current workers and materials.

Human Capital

The useful knowledge, skills, and experience a person has that helps them make money or produce things.

Entrepreneurship

Starting a new business, bringing together land, workers, and money to create new products or services, and being willing to take risks.

Invisible Hand

Adam Smith's idea that letting people act in their own best interest can, without planning, lead to good outcomes for everyone in society.

Economics Enigmas

Strange or puzzling economic situations that economists study to figure out why people act the way they do.

Scarcity Forces Trade-offs Principle

Because there isn't enough of everything, people always have to make choices and give up one thing for another.

Future Consequences Count Principle

The idea that choices made today can have effects far into the future, so think ahead.