Economics Fundamentals: Chapter 1-8 Vocabulary (Notes)

Vocabulary cards covering core concepts introduced in Chapters 1–8, including scarcity, decision making, utility, budget, demand/supply, and basic economic laws.

Scarcity

The condition of having limited resources that constrain decision making.

Resources

Inputs used to produce goods and services, including money, time, and talents.

Time as a resource

Time is a resource used in decision making, alongside money and talents.

Rationality

The assumption that people make decisions to maximize benefit through logical thinking.

Purposeful behavior

Decisions made with a specific goal in mind; closely related to rationality.

Utility

The satisfaction or benefit derived from a choice.

Total utility

The overall satisfaction obtained from consuming a set of goods.

Marginal utility

The additional satisfaction gained from consuming one more unit.

Disutility

Negative satisfaction from consuming an additional unit.

Budget

The amount of resources (money, time, etc.) available for spending.

Trade-offs

Every decision has a trade-off: choosing one option means forgoing another.

Demand

The relationship between price and the quantity that consumers are willing to buy.

Supply

The relationship between price and the quantity that producers are willing to offer.

Price

The monetary value of a good; a key driver of demand and supply.

Economic theory

A tested explanation of observed relationships that may become a law.

Economic law

A well-supported, long-run observable relationship believed to hold, derived via the scientific method.

Scientific method

Observation, formulation of a cause-and-effect hypothesis, and testing to establish laws.

Cause and effect

A relationship where one variable (X) changes and causes a change in another (Y).

Budget constraint / unattainable region

The graphical area outside the budget line; combinations beyond resources are unattainable.

Budget line

The line on a graph showing all combinations of two goods a consumer can buy with a given budget.

Slope (Positive slope)

A line that rises as one variable increases; indicates a positive relationship between variables.

Zero slope

A horizontal line; y does not change as x changes.

Undefined slope / Infinite slope

Vertical line; slope is undefined or infinite, indicating quantity does not respond to price.

Inferior goods

Goods whose demand decreases as income rises.

Superior (normal) goods

Goods whose demand increases as income rises.

Organ market

The theoretical or real market for organs, discussed with ethical and economic implications.

Utility maximization

The goal of choosing options that maximize total or marginal utility given scarcity.