Economics Concepts: Transactions, Utility, and Transfers

This set of flashcards covers key vocabulary and concepts discussed in a lecture on economics, focusing on transactions, utility, exchangeable value, and the implications of transfers.

Transaction

A reciprocal exchange of two things of value between two parties, with a mutual understanding that something is due in return.

Utility

The subjective measure of satisfaction an economic actor derives from consuming a good or service or experiencing an event that fulfills a want.

Exchangeable Value

The measure of what others are willing to sacrifice in order to acquire a good or service or experience an event that fulfills a want.

Expected Utility (E(u))

The utility one expects from ownership or use of the object received.

Expected Cost (E(c))

The cost one expects to incur from engaging in a transaction.

Barter

An exchange of two things of value without the mediation of a base commodity or currency.

Transfer

A unidirectional transaction in which something of value is given without creating a reciprocal obligation contingent on what was received.

Voluntary Transaction

A transaction that occurs only if the expected value of what is obtained is greater than or equal to the expected value of what is forgone for both sides.

Commoditized

When the supply of a good or service is abundant and procuring it requires little effort, resulting in lower exchangeable value.

Budget Constraint

The limit on the consumption bundles that a consumer can afford, restricting access to certain markets based on financial capability.

Economic Pie

A metaphorical representation of the wealth and resources available in an economy, which can grow or shrink.

Consumption

The process of increasing one’s well-being or living standards by consuming the output of one's or others' production.

Division of Labor

The specialization of labor in an economy, leading to greater efficiency and productivity.

Intrinsic Value

The notion that things have value in and of themselves, which is not equivalent to utility.

Niche Goods

Goods that have high exchangeable value due to limited demand or supply among affluent consumers.

Forced Transfers

Transfers that occur without the recipient's expected consent, such as taxes or theft.