Unit I Chapter 1: Basic Economic Concepts - Vocabulary Flashcards

Vocabulary flashcards covering key terms and definitions from Unit 1 Chapter 1 on basic economic concepts.

Economics

The study of how people use limited resources to meet their needs and wants.

Microeconomics

The branch of economics that focuses on the behavior of individuals, households, and businesses as they make decisions about allocating limited resources.

Macroeconomics

The branch of economics that studies the big picture—the performance, structure, and behavior of an entire economy.

Scarcity

The basic economic problem of having limited resources to meet unlimited wants and needs, which forces people to make choices.

Relative scarcity

A situation where some resources are more limited than others depending on place or time.

Trade-off

Giving up one thing to get something else.

Opportunity cost

The value of the next best alternative foregone when making a choice.

Choice

The act of deciding how to use limited resources to satisfy unlimited wants and needs.

Costs and benefits

The positive and negative effects of a choice; every decision has associated costs and benefits.

Benefit

What you gain from a choice.

Decision-making

The process of choosing among alternatives to maximize satisfaction given scarcity.

Allocation

The process of distributing scarce resources to their most efficient or preferred uses.