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Absolute Advantage

The ability of an individual, firm, or country to produce more of a good or service than competitors using the same amount of resources.

Capital (Goods)

Physical assets like machinery, tools, and buildings used to produce goods and services; they are not consumed in the production process but are used to generate output.

Ceteris Paribus (Other Things Equal)

A Latin phrase meaning "all other things being equal," used in economics to isolate the effect of one variable by holding other relevant factors constant.

Command Economy

An economic system where the government makes all decisions about what to produce, how to produce it, and who receives the output.

Comparative Advantage

The ability of a country or firm to produce a particular good or service at a lower opportunity cost than its competitors, leading to potential gains from trade.

Deflation

A decrease in the general price level of goods and services in an economy over a period of time.

Depression

A severe and prolonged downturn in economic activity, often characterized by significant declines in output, employment, and investment.

Economics

The study of how individuals, firms, and societies use limited resources to satisfy unlimited wants; it explores decision-making, resource allocation, and the factors that influence economic behavior.

Economy

The system of production, distribution, and consumption of goods and services within a particular geographic area, usually a country.

Efficient

Achieving maximum productivity with minimum wasted effort or expense; in economics, it often refers to the optimal allocation of resources to maximize output.

Entrepreneur

An individual who organizes, manages, and assumes the risks of a business or enterprise, often by bringing together resources to produce goods and services.

Incentive

Something that motivates or encourages a person to take action, particularly in economic behavior (e.g., financial rewards, penalties).

Inflation

A sustained increase in the general price level of goods and services in an economy over a period of time.

Labor

The human effort, both physical and mental, used in the production of goods and services.

Labor Force

The total number of people employed or actively seeking employment in an economy.

Land

Natural resources used in the production of goods and services, including physical land and any resources that come from it (e.g., minerals, water, forests).

Marginal Analysis

The examination of the additional benefits of an activity compared to the additional costs incurred by that same activity.

Macroeconomics

The branch of economics that studies the behavior and performance of an economy as a whole, including inflation, unemployment, and economic growth.

Market Economy

An economic system in which decisions about production, investment, and distribution are guided by the price signals created by the forces of supply and demand.

Microeconomics

The branch of economics that studies individual agents and markets, such as households, firms, and the interactions between them.

Model

A simplified representation of reality used to explain or predict economic behavior; often represented mathematically or graphically.

Normative Economics

The part of economics that expresses value judgments about what the economy should be like; focuses on what ought to be rather than what is.

Opportunity Cost

The value of the next best alternative that is foregone when making a decision.

Output

The total amount of goods and services produced by an economy, industry, or firm.

Positive Economics

The branch of economics that focuses on the description and explanation of economic phenomena; it is based on facts and cause-and-effect relationships.

Production Possibilities Curve (PPC)

A graphical representation showing the maximum quantity of two goods that can be produced within a given set of resources and technology, assuming that all resources are fully and efficiently utilized.

Property Rights

The legal rights to use, control, and transfer ownership of property, whether it's physical property like land or intangible property like patents.

Resource

Any input used to produce goods and services, including land, labor, capital, and entrepreneurship.

Scarcity

The fundamental economic problem of having limited resources to satisfy unlimited wants.

Specialization

The process of focusing on a narrow area of production, allowing individuals or firms to become more efficient and produce at a lower cost.

Terms of Trade

The rate at which one good can be exchanged for another between countries; it represents the relative prices of exports and imports.

Trade-off

The concept that, because resources are limited, producing or consuming more of one good or service means producing or consuming less of another.

Unemployment

The condition of someone who is capable of working, is actively seeking work, but is unable to find any employment.

Black Market

An illegal market where goods and services are traded at prices or in quantities that violate government regulations.

Change in Demand