Principles of Economics: Utility, Scarcity, and Incentives

Vocabulary flashcards covering key economic concepts from the notes.

Utility

The satisfaction or happiness that individuals gain from consuming goods and services; people aim to maximize utility.

Scarcity

The condition of having limited resources relative to unlimited wants, leading to trade-offs.

Trade-off

A situation in which choosing one option requires giving up another; arises from scarcity.

Opportunity Cost

The next-best alternative foregone when making a decision.

Incentives

Something that motivates people to act in a certain way; governments may use incentives to influence behavior.

Utility Maximization

The idea that individuals strive to maximize their happiness or satisfaction from choices.

Government Role (Incentives)

Governments can influence behavior by designing policies and incentives to achieve desired outcomes.