Introduction to Economics

These flashcards cover essential vocabulary terms and concepts related to economics, specifically focusing on supply and demand, price controls, and GDP.

Price Control

Government-imposed limits on the prices charged for goods and services, which can lead to shortages or surpluses in the market.

Price Ceiling

The maximum price a seller can charge for a product, set by the government to make goods more affordable.

Price Floor

The minimum price a seller can charge for a product, set by the government to ensure sellers receive a fair price.

Equilibrium

The point at which supply equals demand for a product, resulting in a stable market price.

Supply and Demand Model

A model that helps predict how prices and quantities of goods will change in response to various market factors.

Scarcity

The basic economic problem that arises because resources are limited while human wants are unlimited.

Gross Domestic Product (GDP)

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

Normal Goods

Goods for which demand increases as consumer income rises.

Inferior Goods

Goods for which demand decreases as consumer income rises.

Market Failure

A situation in which the allocation of goods and services by a free market is not efficient.

Opportunity Cost

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

Substitutes

Products or services that can be used in place of each other.

Complements

Products or services that are used together, where the demand for one increases the demand for the other.

Law of Demand

As the price of a good or service decreases, the quantity demanded increases, and vice versa.

Law of Supply

As the price of a good or service increases, the quantity supplied increases, and vice versa.