Principles of Economics

These flashcards cover key economic concepts, definitions, and differences between theories relevant to the lecture.

Opportunity Cost

The amount of one product that must be given up to produce another product.

Microeconomics

The study of economic interactions between households and firms through markets.

Macroeconomics

The study of the economy as a whole, including inflation, unemployment, and national output.

Positive Statement

An objective statement based on factual analysis, does not include subjective opinions.

Normative Statement

A subjective statement expressing what ought to be or a judgment about a policy.

Minimum Wage

The lowest legal wage that can be paid to workers, set by the government.

Shifting Demand Curve

When the demand curve moves due to factors other than price, such as changes in consumer income or preferences.

Inferior Good

A type of good for which demand decreases as income increases.

Substitutes

Goods that can replace each other; an increase in the price of one leads to an increase in demand for the other.

Complements

Goods that are consumed together; an increase in the price of one leads to a decrease in the demand for the other.

Market Demand

The total demand for a product or service within a market, summed across all consumers.

Change in Quantity Demanded

Movement along the demand curve due to price change.

Change in Demand

Shift of the entire demand curve due to non-price factors.

Elasticity of Demand

A measure of how much the quantity demanded of a good responds to a change in price.

Factors Affecting Demand

Includes consumer preferences, income, substitutes, complements, and expectations of future price.

Deflation

A decrease in the general price level of goods and services.

Supply and Demand

The fundamental economic model explaining how prices are determined in a market.