Basic Economic Concepts

Flashcards covering key terms and concepts from basic economic concepts, including definitions of terms related to scarcity, demand, supply, and utility.

Scarcity

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

Limited Resources

Resources that are finite and limited, such as land, labor, capital, and entrepreneurship.

Marginal Utility

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

Opportunity Cost

The value of the next best alternative foregone when a choice is made.

Ceteris Paribus

A Latin phrase meaning 'all other things held constant,' used in economic analyses.

Demand Curve

A graph showing the relationship between the price of a good and the quantity demanded over a given period.

Shift in Demand

A situation in which the quantity demanded changes at every price level due to a change in a non-price determinant.

Substitutes

Goods that can be used in place of one another; if the price of one increases, the demand for the other increases.

Complements

Goods that are often used together; if the price of one increases, the demand for the other decreases.

Normal Goods

Goods for which demand increases as consumer income rises.

Inferior Goods

Goods for which demand decreases as consumer income rises.

Equilibrium Price

The price at which the quantity demanded and quantity supplied are equal.

Surplus

A situation that occurs when the quantity supplied exceeds the quantity demanded at a given price.

Shortage

A situation that occurs when the quantity demanded exceeds the quantity supplied at a given price.

Excise Tax

A per unit tax imposed on the production or sale of a good, aimed at reducing consumption of that good.

Utility Maximization

The economic principle where consumers allocate their income in a way that maximizes their satisfaction.

Marginal Cost

The increase in total cost that arises from the production of an additional unit of output.