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economics
the study of scarcity and choice
Trade-off
you make a trade-off when you give up something in order to get something else (what you are gaining is the trade-off)
resource or factor of productions
anything that can be used to produce something else
land
all resources that come from natures, such as timber, wind, and petroleum
labor
the effort of workers
capital
manufactured goods used to make other goods and services
entrepreneurship
the efforts of entrepreneurs in organizing resources for production, taking risks to create new enterprises, and innovating to develop new products and production processes
scarcity
when unlimited wants exceed limited resources
opportunity cost
the value of the next best alternative (choice) that you have given up in order to get an item
Macroeconomics
concerned with the overall ups and downs of the economy (large scale)
household
a person or group of people that share their income
firm
any organization that produces goods or services for sale
PPC
the production possibilities curve illustrates the necessary trade-offs in an economy that produces only two goods
ceteris paribus
"other things equal" means that all other relevant factors remain unchanged
efficinet
there are no missed opportunities - there is no way to make some people better off without making other people worse off
economic growth
an increase in the maximum amount of goods and services an economy can produce
trade
providing goods and services to others and receive goods and services in return
specialization
when each person focuses on the task that they are good at performing
comparative advantage
having the lowest opportunity cost among the people or countries that can produce that good or service
absolute advantage
being able to produce more of a good or service with the given amount of time and resources
terms of trade
the rate at which one good can be exchanged for another and have both parties
quantity demanded
the amount of a good or service consumers are willing and able to buy at some specific price, it is shown as a single point in a demand schedule or along a demand curve
demand curve
a graphical representation of a demand schedule, it shows the relationship between quantity demanded and price
law of demand
states that a higher price for a good or service, all other things being equal, leads to people to a smaller quantity demanded of that good or service
change in demand
a shift of the demand curve, which changes the quantity demanded at any given price
movement along the demand curve
a change in the quantity demanded of a good that is the result of a change in the good's price
substitutes
goods that are meant to be used in place of one another, a rise in the price of one of the goods leads to a decrease in demand for the other good
complements
goods that are bought together to be used together, a rise in the price of one of the good leads to a decrease in demand for the other good
normal good
when a rise in consumer income increases the demand for the good and vice versa
inferior good
when a rise in consumer income decreases the demand for the good and vice cersa
quantity supplied
the actual amount of a good or service people are willing to sell at some specific price
supply curve
the relationship between the quantity supplied and the price
law of supply
states that all other things being equal, the price and quantity supplied of a good are positively or directly related
change in supply
a shift of the supply curve, which indicates a change in the quantity supplied at any given price
movement along the supply curve
a change in the quantity supplied of a good arising from a change in the good's price
input
a good or service that is used in the production of another good or service
tax
treated as an input cost, these are fees producers must pay to the federal government
subsidy
treated as an input cost, these are payments from the government to producers to assist in the production of certain goods or service that are deemed beneficial to society
substitues in production
goods that producers can use the same inputs to make either one good or the other
complements in production
goods are treated as these if increased production of either good creates more of the other good
equilibrium
the point where QS = QD, this is the intersection point between the supply and demand curve
surplus
also known as excess supply and caused by a price floor, this exists at a price above equilibrium where Qs > Qd
shortage
also known as excess demand and caused by a price ceiling, this exists at a price below equilibrium where Qd > Qs
Note 
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