Introduction to Economics

These flashcards cover essential concepts and definitions from the Introduction to Economics lecture, providing a concise review tool for studying key economic principles.

Economics

The study of how people allocate scarce resources to satisfy unlimited wants.

Scarcity

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

Welfare Definition

Economics defined as the study of human welfare, emphasizing education, health, and income.

Smithian Invisible Hand

The concept that the self-regulating nature of the marketplace leads to economic benefits.

Opportunity Cost

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

Production Possibilities Frontier (PPF)

A curve displaying the maximum feasible amounts of two products that a producer can create with available resources.

Microeconomics

The branch of economics that studies individual units of an economy, such as households or firms.

Macroeconomics

The branch of economics that studies the behavior of an economy as a whole, focusing on aggregate changes.

Positive Economics

The branch of economics that deals with objective analysis, describing economic phenomena without making judgments.

Normative Economics

The branch of economics that incorporates subjective analysis and value judgments about economic fairness.

Inductive Reasoning

A logical process of reasoning from specific observations to broader generalizations.

Deductive Reasoning

A logical process that begins with a general statement and examines the possibilities to reach a specific, logical conclusion.

Market Economy

An economic system in which decisions regarding production and consumption are made by individual producers and consumers.

Elasticity of Demand

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

Perfect Competition

A market structure characterized by a large number of small firms, homogenous products, and easy entry and exit.

Monopoly

A market structure where a single firm is the sole producer of a product with no close substitutes.

Oligopoly

A market structure characterized by a small number of firms whose decisions are interdependent.

Marginal Cost

The increase in total cost that arises from the production of one additional unit of a product.

Average Total Cost (ATC)

The total cost divided by the quantity produced; it includes both fixed and variable costs.