Economics and Choice

Vocabulary flashcards based on key concepts from lectures on Economics and Choice.

Economics

The study of how societies allocate scarce resources to meet unlimited wants and needs.

Scarcity

The fundamental and ongoing tension that confronts individuals, businesses, governments, and societies, reflecting the limited nature of resources.

Economic Systems

The means by which countries and governments distribute resources and trade goods and services.

Free Enterprise

An economic system where private businesses operate in competition and largely free of state control.

Market Economy

An economic system where economic decisions and the pricing of goods and services are guided by the interactions of citizens and businesses.

Command Economy

An economic system in which the government makes all decisions regarding the production and distribution of goods and services.

Traditional Economy

An economy that relies on customs, history, and time-honored beliefs, often based on agriculture and barter.

Mixed Economy

An economic system that incorporates elements of both capitalism and socialism, where both private and government participation exist.

Opportunity Cost

The loss of potential gain from other alternatives when one alternative is chosen.

Marginal Benefit

The additional satisfaction or utility that a person receives from consuming one more unit of a good or service.

Marginal Cost

The cost added by producing one additional unit of a product or service.

Competition

The contest between businesses to attract customers, which can drive innovation and efficiency.

Consumer Sovereignty

The situation in the economy where the preferences and needs of consumers dictate the production of goods and services.

Voluntary Exchange

A situation where a buyer and a seller engage in market transactions willingly without coercion.

Market Failure

A situation in which the allocation of goods and services by a free market is not efficient.

Public Goods

Products that are non-excludable and non-rivalrous, meaning they are available for free and consumption by one does not reduce availability to others.

Free Rider Problem

A situation where individuals can benefit from a resource, public good, or service without paying for it.