Basic Economics Vocabulary

This set of flashcards covers fundamental economic vocabulary terms including factors of production, market structures, and supply and demand principles based on the lecture notes.

Scarcity

The condition that results from society not having enough resources to produce all the things people would like to have.

Economic reasoning

The process of making decisions by comparing the marginal benefits and marginal costs of an action.

Private property

Resources and products owned by individuals or businesses rather than by the government.

Monopolistic competition

A market structure in which many companies sell products that are similar but not identical.

Land

Natural resources and the nature-provided items used in the production of goods and services.

Entrepreneurship

The process of starting, organizing, managing, and assuming the responsibility for a business.

Profit

The financial gain made in a transaction; the difference between total revenue and total cost.

Demand

The desire to own something and the ability to pay for it at various price levels.

Substitute good

A product that can be used in place of another, where an increase in the price of one leads to an increase in demand for the other.

Law of supply

The principle that producers offer more of a good as its price increases and less as its price falls.

Surplus

A situation in which the quantity supplied is greater than the quantity demanded, usually occurring when the price is above the equilibrium price.

Trade off

An alternative that we sacrifice when we make a decision.

Goods

Physical objects such as clothes or shoes that can be purchased.

invisible hand

Adam Smith's concept that individuals' self-interested actions in a free market lead to positive social and economic outcomes.

Oligopoly

A market structure in which a few large firms dominate a market.

Labor

The effort that people devote to a task for which they are paid.

Producer

A person or company that creates goods or services to sell to others.

Productivity

The ratio of the quantity and quality of units produced to the labor and resources used to produce them.

Law of demand

The principle that consumers will buy more of a good when its price is lower and less when its price is higher.

Complementary good

A product that is used together with another product, where an increase in the price of one leads to a decrease in demand for the other.

Quantity supplied

The amount of a good or service that a producer is willing and able to sell at a specific price.

Incentive

An expectation or reward that encourages people to behave in a certain way.

Opportunity cost

The most desirable alternative given up as the result of a decision.

Services

Actions or activities that one person performs for another.

Perfect competition

A market structure in which a large number of firms all produce the same identical product.

Monopoly

A market structure in which a single seller dominates the market for a unique product with no close substitutes.

Capital

Any human-made resource that is used to create other goods and services, including tools and machinery.

Consumer

An individual who purchases and uses goods and services to satisfy their wants and needs.

Innovation

The process of bringing new methods, products, or ideas into use.

Quantity demanded

The amount of a good or service that a consumer is willing and able to purchase at a specific price.

Supply

The amount of goods or services available for sale at various price levels.

Shortage

A situation in which the quantity demanded is greater than the quantity supplied, usually occurring when price is below equilibrium.

Marginal analysis

The study of the costs and benefits of making incremental changes to an activity.

Mixed Economy

United States

Traditional Economy

Himalayan Tribes

Command Economy

North Korea