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Economics
Study of human action with limited resources.
Scarcity
Unavoidable condition of limited resources.
Wants
Unlimited desires that drive human behavior.
Choice
Decision-making influenced by information and incentives.
Markets
Exchange of goods or services between parties.
Benefit
Positive outcome resulting from a good or service.
Utility
Satisfaction derived from consuming a good.
Rational Economics
Belief that choices are made for expected benefits.
Behaviorist Economics
Theory suggesting actions are conditioned, not rational.
Value
Subjective worth perceived by buyers in trade.
Price
Monetary amount assigned to a good or service.
Labor Theory
Value determined by input costs and labor.
Marginal Benefit
Maximum price willing to pay for one more unit.
Financial Capital
Resources available for investment or expenditure.
Physical Capital
Tangible items used in production, like tools.
Human Capital
Skills and knowledge possessed by individuals.
Social Capital
Value derived from social networks and relationships.
Capitalism
Economic system allowing capital accumulation.
Capitol
Resources allocated for a specific purpose.
Government
Authority holding power to enforce laws.
Incentives
Motivations influencing choices and behaviors.
Subjective Value
Value based on individual perception and context.
Trade
Exchange of goods based on perceived value.
Gray Areas in Government
Ambiguity in authority between police and mafia.
Contracts
Voluntary agreements for future exchanges.
Explicit Contract
Clear agreements like handshake or payment expectations.
Liberty/Freedom
Discretion over personal labor and benefits.
Taxation
Reduction of individual economic freedom.
Self-interest
Actions taken for personal benefit.
Greed
Self-interest focused solely on oneself.
Charity
Self-interest with intangible benefits like conscience.
Free and Voluntary Exchange
Value increase through subjective trading benefits.
Wealth
Value based on buyer's perceived benefits.
Creation of Wealth
Difference in subjective values between buyer and seller.
Unintended Consequences
Outcomes that can be good or bad.
Unseen Consequences
Effects without tangible outcomes affecting economy.
Opportunity Cost
Benefit lost from not pursuing next best option.
Marginal Analysis
Evaluation of benefits from one additional unit.
Marginal Consumption
Benefits derived from consuming one more unit.
Marginal Production
Benefits from producing one additional unit.
Marginal Benefits
Benefits that decrease as quantity increases.
Demand Curve
Graph showing relationship between price and quantity demanded.
Supply Curve
Graph showing relationship between price and quantity supplied.
Economic Freedom
Ability to make choices without restrictions.
Intangible Benefits
Non-material advantages gained from actions.
Seen Consequences
Consequences that can be traced and identified.
Marginal Benefit
Additional satisfaction from consuming one more unit.
Marginal Cost
Change in cost for producing one additional unit.
Opportunity Cost
Value of the next best alternative foregone.
Economies of Scale
Cost advantages from producing in large quantities.
Producer Surplus
Revenue exceeding production costs for producers.
Total Benefit
Sum of all marginal benefits received.
Q prime
Point where marginal benefit equals marginal cost.
Law of Supply
Supply increases as price increases.
Quantity Supplied
Amount of goods producers are willing to sell.
Input Costs
Expenses incurred to produce goods or services.
Number of Suppliers
Total suppliers affecting market supply levels.
Technology Impact
Efficiency improvements increase supply availability.
Net Benefit
Total benefit minus total cost of production.
Marginal Benefit Curve
Graph representing consumer willingness to pay.
Marginal Cost Curve
Graph showing cost of producing additional units.
Total Costs
Sum of all marginal costs incurred.
Revenue
Total income generated from sales of goods.
Market Penetration
Extent to which a product is recognized and bought.
Consumer Surplus
Difference between what consumers pay and what they are willing to pay.
Decreasing Marginal Benefit
Reduction in additional satisfaction from extra units consumed.
Shaded Area on Graph
Represents net benefit in economic analysis.
Profit Signifier
Symbol (Pi) used to represent profit in economics.
Technology
Enhancements that increase production efficiency.
Human Capital
Skills and knowledge contributing to production efficiency.
Law of Demand
Price and quantity demanded have an inverse relationship.
Equilibrium
Point where supply equals demand in a market.
Price Floors
Minimum price set above equilibrium to prevent drops.
Minimum Wage
Legal lowest hourly wage employers can pay.
Price Ceilings
Maximum price set below equilibrium to prevent rises.
Substitute Goods
Products that can replace each other in consumption.
Complementary Goods
Products usually consumed together, enhancing each other's value.
Shortages
When demand exceeds supply at a given price.
Surpluses
When supply exceeds demand at a given price.
Cost of Inputs
Expenses incurred in producing goods or services.
Preferences
Consumer tastes influencing demand for products.
Incomes
Consumer earnings impacting purchasing power and demand.
Price of Other Goods
Influences demand through substitutes and complements.
Change in Demand
Shift in demand curve due to external factors.
Aluminum Bats Example
Change in demand for wooden bats due to substitutes.
Market Options
Choices available to consumers and suppliers in equilibrium.
Supply
Producers' willingness to sell goods at various prices.
Demand
Consumers' desire to purchase goods at various prices.
Price Ceiling
Maximum allowable price set below equilibrium.
Price Floor
Minimum allowable price set above equilibrium.
Shortage
Excess demand when price is below equilibrium.
Surplus
Excess supply when price is above equilibrium.
Q Prime
Price point where demand exceeds supply.
Marginal Cost
Cost of producing one additional unit.
Marginal Benefit
Additional benefit received from consuming one more unit.
Economic Profit
Revenue minus total costs, including opportunity costs.
Accounting Profit
Revenue minus explicit costs of production.
Minimum Wage
Legally mandated lowest hourly wage for workers.
Consumer Behavior
Patterns in how consumers make purchasing decisions.
Producer Behavior
Patterns in how producers set prices and supply.
