JCH Economics/Unit 1 Concepts

Tradeoff

the exchange of one benefit or advantage for another that is thought to be better

Incentives

something that motivates a person to take a particular course of action; could be positive or negative

Resource

anything used to produce an economic good or service

Microeconomics

the study of the economy at the level of individuals, households, and businesses

Macroeconomics

the study of the workings of the economy as a whole

Margin

One more

Marginal cost

what is given up by adding one more unit to an activity

Marginal benefit

what is gained by adding one more unit to an activity

Marginal utility

the extra satisfaction or pleasure achieved from an increase of one additional unit of a good or service

scarcity-forces-tradeoffs principle

the idea that limited resources force people to make choices and face tradeoffs when they choose

no-free-lunch principle

the idea that every choice involves tradeoffs; a restatement of the scarcity-forces-tradeoffs principle

cost-versus-benefits principle

the idea that people choose something when the benefits of doing so outweighs the cost

future-consequences-count principle

the idea that decisions made today have effects in the future

Invisible hand

Adam Smith's metaphor to explain how an individual's pursuit of economic self-interest can promote the well-being of society as a whole

Economics

How decisions are made about scare resources used to satisfy the wants and needs of society.

Consequences

The result realized following a decision. Often described as either positive or negative.

Scarcity

The inability to satisfy all wants at the same time. All resources and goods are limited. This requires consumers to make choices.

Monetary Incentives

Motivates buying decisions by saving consumers money.

Non-Monetary Incentives

Motivates buying decision by satisfying an intrinsic need "I look great in theses jeans".

Opportunity Cost

The next best alternative given up when a choice is made.

Supply

The amount of goods or services producers are willing and able to sell at a certain price.

Utility

The satisfaction gained from consumption

Land (Natural Resources)

Renewable and nonrenewable raw materials found in nature and used in the production of goods and services.

Factors of Production

The means through which goods and services are produced.

Capital Resources

Physical goods and equipment required for the production of goods and services.

Entrepreneurs

Risk takers and innovators that recognize opportunities in the marketplace and create businesses that produce goods & services.

Labor (Human Resources)

Skills and knowledge acquired through experience & education used in the production of goods and services.