Principles of Economics Lecture Notes

Vocabulary flashcards based on the principles discussed in the economics lecture.

Tradeoff

A situation where more of one thing necessitates less of another due to limited resources.

Cost

What you give up to get something, which can be measured in money, time, or other goods.

Rational People

Individuals who make decisions by weighing costs and benefits to maximize their utility.

Marginal Thinking

The consideration of the additional benefits and costs of a decision, rather than making all-or-nothing choices.

Incentives

Rewards or penalties that motivate individuals to alter their behavior.

Comparative Advantage

The ability of an individual or group to carry out a particular economic activity more efficiently than another activity.

Market

A mechanism through which buyers and sellers interact to set prices and allocate resources.

Market Failure

A situation where the allocation of goods and services by a free market is not efficient.

Externality

The impact of one person's actions on the well-being of a bystander, which can be negative or positive.

Property Rights

The rights of individuals to own and control scarce resources.

Inflation

A general increase in prices and fall in the purchasing value of money.

Phillips Curve

A graphical representation showing the inverse relationship between the rate of inflation and the rate of unemployment.