What Is Economics?

These flashcards cover essential concepts of economics, focusing on key definitions, differentiation between microeconomics and macroeconomics, and the implications of self-interest against social interest.

Scarcity

The inability to satisfy all our wants.

Economics

The social science that studies the choices that individuals, businesses, governments, and entire societies make as they cope with scarcity.

Microeconomics

The study of choices that individuals and businesses make and how those choices interact in markets.

Macroeconomics

The study of the performance of national and global economies.

Incentive

A reward that encourages an action or a penalty that discourages an action.

Opportunity Cost

The highest-valued alternative that must be given up to obtain something.

Factors of Production

Resources grouped into four categories: land, labor, capital, and entrepreneurship.

Self-interest

Making choices that one considers best for oneself.

Social interest

Choices that are best for society as a whole, involving efficiency and fair shares.

Positive statement

A statement that can be tested by checking it against facts.

Normative statement

A statement that expresses an opinion and cannot be tested.

Efficiency in resource use

A situation where it's not possible to improve one person's situation without worsening another's.