Economics Review Notes

These flashcards cover key terms and concepts from the economics lecture notes, helping to reinforce vocabulary and understand fundamental principles.

Opportunity Cost

The cost of the next best alternative that is forgone when making a decision.

Marginal Benefit

The additional benefit received from consuming one more unit of a good or service.

Microeconomics

The branch of economics that studies individual units, such as households and firms.

Maximizers

Rational decision-makers who aim to achieve the highest benefit or utility.

Trade-offs

The alternatives that must be given up when a choice is made.

Allocative Efficiency

A situation in which resources are distributed in a way that maximizes the total benefit received by society.

Production Efficiency

A situation in which an economy cannot produce more of one good without producing less of another.

Comparative Advantage

The ability of an individual or group to carry out a particular economic activity at a lower opportunity cost than another.

Absolute Advantage

The ability of an individual or group to carry out a particular economic activity more efficiently than another individual or group.

Economic Models

Simplified representations of economic processes that help to understand and predict economic behavior.

Price Elasticity of Demand

A measure of how much the quantity demanded of a good responds to a change in the price of that good.

Inferior Goods

Goods for which demand increases as consumer incomes fall.

Substitutes

Goods that can be used in place of each other, where an increase in the price of one increases the demand for the other.

Complementary Goods

Goods that are consumed together, where an increase in the price of one leads to a decrease in the demand for the other.

Market Equilibrium

The point at which the quantity supplied equals the quantity demanded at a given price.

Economic Growth Rate

The rate at which a country's economy grows or shrinks in a given period, usually expressed as a percentage.

Scarcity

The fundamental economic problem of having seemingly unlimited human wants in a world of limited resources.

Rational Decision Making

A systematic process of evaluating options to maximize benefits and minimize costs.