Microeconomics (ECON 2010U) Chapter 1: What is Economics?

These flashcards cover key concepts from the lecture notes on microeconomics, including definitions and distinctions between core economic principles.

Economics

The social science that studies the choices made by individuals, businesses, governments, and societies as they cope with scarcity.

Scarcity

The inability to satisfy all our wants, leading to the necessity of making choices.

Microeconomics

The study of choices that individuals and businesses make, and how those choices interact in markets.

Macroeconomics

The study of the performance of national and global economies.

Incentive

A reward that encourages an action or a penalty that discourages an action.

Factors of Production

The productive resources used to produce goods and services, categorized into land, labor, capital, and entrepreneurship.

Human Capital

The knowledge and skill that people obtain from education, on-the-job training, and work experience.

Opportunity Cost

The highest-valued alternative that must be given up to obtain something else.

Self-Interest

Choices that are best for the individual making them.

Social Interest

Choices that are best for society as a whole, encompassing efficiency and equity.

Globalization

The expansion of international trade, borrowing and lending, and investment.

Efficiency

Resource use is efficient if making someone better off is not possible without making someone else worse off.

Equity

Fairness in the distribution of resources, though definitions of what is fair may vary among economists.

Marginal Benefit

The additional benefit gained from a slight increase in an activity.

Marginal Cost

The additional cost incurred from a slight increase in an activity.