Economics Vocabulary and Concepts

A set of flashcards covering introductory economics vocabulary, factors of production, market structures, and economic goals as outlined in the lecture notes.

Scarcity

Problem that affects all societies resulting from not having enough resources and unlimited desires

Tradeoffs

alternative that must be given up when one choice is made over the other

Opportunity Cost

of the next best alternative use of a resource

Marginal Analysis

Comparing the extra benefit of an action w/ its extra cost

Marginal Benefit

Additional benefit gained from doing one more unit of something

Marginal Cost

extra cost of producing one additional unit of production

Rational decisions

Choices made by comparing costs and benefits to select the best option

Incentives

Rewards / Penalties to encourage people to act in certain ways

Factors of Production

Land, Labor, Capital, and entrep. Ship

Land

natural resources from earth.

Labor

Human activity - abilities & efforts

Capital

tools, equipment, factories used in producing goods & services - one of 4 factors of production

Entrepship

Risk takes who make new products or Services for profit

Circular Flow of the Economy

movement of money, resources, goods, and services b/w households & firms

Resource (Factor) Market

Households sell LLCE to firms

Product Market

Firms sell goods and services to households.

Firms

Businesses that use resources to produce /sell goods and services

Households

Individuals or families who own resources and purchase goods /services.

Production Possibilities Curve

A graph showing the max combinations of two goods an eco can produce w/ its resources

Capitalism

System in which private citizens own and use the factors of production to generate profits

Socialism

System in which gov. owns some of production and helps determine producing goods.

Voluntary Exchange

act of buyers and sellers freely and willingly engaging in market transactions

Nonfraudulant Exchange

Honest trade in which neither Side lies or hides important info.

Eco. goals

results a society wants its eco, to achieve

Freedom

Ability to choose your job, purchases, and how to use your property

Equity

goal of creating fairness

Security

Protection from unemployment, poverty, or illness.

Growth

Increase in prod. of goods services Over time

Stability

Maintaining steady prices, employment, and eco. activity

Efficiency

Using limited resources wisely while avoiding waste

Private Property

People own & control their possessions as they Wish

Market failures

when weak competition causes inefficiency, too much or too little

Public good

economic products that are paid for & consumed Collectively-highways, national defense, police

Negative externalities

Harmful effects on econ. on people not involved like pollution

Pos externalities

Helpful effects on econ on people not involved, like education benefiting Society

Rational Decision Making

Choosing an option when its $\text{marginal benefit} \ge \text{marginal cost}$