Introduction to Economic Concepts: Scarcity, Choice, and Production

A set of vocabulary flashcards covering basic economic concepts including scarcity, factors of production, types of economics, and decision-making frameworks.

Economics

A social science concerned with the efficient use of scarce resources to achieve maximum satisfaction of economic wants; the study of how individuals and societies deal with scarcity.

Scarcity

The fundamental economic problem where society has unlimited wants but limited resources.

Microeconomics

The study of small economic units, such as individuals, firms, and specific markets, focusing on things like supply and demand in specific industries or labor markets.

Macroeconomics

The study of the large economy as a whole or economic aggregates, including economic growth, government spending, inflation, and unemployment.

Positive Statements

Statements based on facts that avoid value judgments and describe "what is."

Normative Statements

Statements that include value judgments and describe "what ought to be."

Land

All natural resources used to produce goods and services, such as water, sun, plants, and animals.

Labor

Any effort a person devotes to a task for which that person is paid, such as manual laborers, lawyers, doctors, and teachers.

Physical Capital

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

Human Capital

The skills or knowledge gained by a worker through education and experience.

Entrepreneurship

Ambitious leaders who combine the other factors of production to create goods and services; they take initiative, innovate, and act as risk bearers.

Profit

The financial gain obtained by entrepreneurs, calculated as $\text{Profit} = \text{Revenue} - \text{Costs}$.

Trade-Off

A situation in which having more of one thing necessarily means having less of something else.

Opportunity Cost

The most valued opportunity or alternative that is given up when making a choice.

Production Possibilities Frontier (PPF)

A graphic representation of all possible combinations of two goods that an economy can produce, illustrating scarcity, choice, efficiency, and opportunity cost.

Marginal

An economic term meaning "additional."

Marginal Analysis

A decision-making process that involves weighing the additional benefit (MB) against the additional cost (MC) of an action.

Cost-Benefit Analysis

The process of weighing the costs and benefits of a decision to determine if the activity should be undertaken (undertaken if benefits are greater than costs).

Incentive

Something that encourages or motivates a person to take action.

Unintended Effects

The unforeseen outcomes of actions taken by people, such as a price increase leading to fewer sales and potentially less money for the store owner.