econ

Economics

study of how people use limited resources to satisfy their wants and needs

Opportunity Cost

what you give up when you choose one option over another

Scarcity

when there is a lack of resources to meet unlimited wants

Law of Supply

when prices go up, producers supply more

Law of Demand

when prices go up, people buy less

Trade Offs

choosing one thing means giving up something else

Criteria

standards or factors you use to make a decision

Sunk Cost Fallacy

continuing something just because one already spent time/money/effort on it, even if it’s not worth it

Production Possibilities Curve

a graph showing the maximum output of two goods using limited resources

Market Economy

economy where decisions are made by individuals and businesses, not the government.

6 traits of market economy

freedom of choice / profit motive / competition / limited government / voluntary exchange / private property

Elasticity of Supply & Demand

how much supply or demand changes when price changes

Cognitive Bias

mental shortcuts that affect decisions

FOMO

fear of missing out, which influences your purchases and actions

Bandwagon Appeal

hopping on to trends

Budget

a plan for how you will spend and save $$

Loss Aversion

people prefer avoiding losses more than gaining the same amount

Credit Card

card that borrows/loans money from banks, user pays it back every month (if late, interest fees apply), users can build credit and have multiple benefits (i.e cashback)

Taxes

money paid to the government to fund services

Purpose of taxes

funds road construction, education systems, and military

Types of taxes

income tax/sales tax/property tax

Mandatory spending

required spending: rent, taxes, bills

Discretionary spending

optional spending: shopping, eating out

Checking account

for everyday purchases, easy access to $

Savings account

for saving money, earns interest, less frequent use (rarely, if ever), and users can be charged/fined if taking money out of savings account