EC0 TERM ONE BASIC NOTES

W.I.S.E.C.H.O.I.C.E.S

An acronym representing key concepts in economics: Economic Well-being, Interdependence, Scarcity, Efficiency, Choices, Intervention, Change, Equity, and Sustainability.

W - Economic Well-being

A condition where individuals have satisfactory income and resources to maintain a standard of living.

I - Interdependence

The reliance between individuals, communities, and nations for resources and trade.

S - Scarcity

The limited availability of resources, which necessitates choices about their use.

E - Efficiency

The optimal use of resources to achieve the best possible outcome or output.

T - Trade-offs

The concept of giving up one thing to obtain another due to limited resources.

C - Choice

The decision made when faced with scarcity, selecting one option over another.

R - Resources

The inputs used to produce goods and services, including natural, human, and capital resources.

D - Demand

The desire and ability of consumers to purchase goods and services at various prices.

S - Supply

The total amount of a good or service that is available for purchase at any given price.

M - Market Equilibrium

The point where the quantity supplied equals the quantity demanded, resulting in a stable price.

E - Elasticity

A measure of how much the quantity demanded or supplied of a good responds to changes in price.

P - Profit

The financial gain obtained when the revenue from sales exceeds the costs incurred in producing goods or services.

C - Competition

The rivalry among sellers to attract customers while increasing sales, often resulting in better quality and lower prices.

G - Gross Domestic Product (GDP)

The total monetary value of all finished goods and services produced within a country's borders in a specific time period.

I - Inflation

The rate at which the general level of prices for goods and services rises, eroding purchasing power.

U - Unemployment Rate

The percentage of the labor force that is jobless and actively seeking employment.

B - Budget

A plan for managing income and expenses, helping to allocate resources effectively.

A - Asset

An economic resource owned by an individual or organization that is expected to provide future benefits.

L - Liability

A financial obligation or debt owed to others, which can affect net worth.

C - Capital

Financial assets or physical tools used in the production of goods and services.

F - Fiscal Policy

Government adjustments to spending and tax rates to influence the economy.

M - Monetary Policy

The management of money supply and interest rates by central banks to control inflation and stabilize currency.

S - Standard of Living

The level of wealth, comfort, material goods, and necessities available to a certain socioeconomic class.

O - Opportunity Cost

The loss of potential gain from other alternatives when one alternative is chosen.

N - Needs vs. Wants

Distinguishing between essential goods/services required for survival and those that are desired but not necessary.

C - Consumer Sovereignty

The theory that consumer preferences determine the production of goods and services.

E - Externalities

Unintended consequences of an economic activity that affect third parties without being reflected in costs.

Bounded Rationality

The concept that consumers make rational decisions only within the limits of the information they have, the cost of acquiring that information, and their mental processing capabilities.

Bounded Self-Control

The idea that individuals can only exercise self-control to a certain extent, influenced by their circumstances and temptations.

Bounded Selfishness

The notion that individuals act selfishly only to a certain limit, as self-interested behavior does not fully account for altruistic actions and willingness to support the public good.

Imperfect Information

A situation where consumers do not have access to complete information, leading to suboptimal decision-making and inability to maximize utility.