ECON 1010

Incentives

Rewards and penalties that motivate behavior.

Invisible Hand

A concept indicating that individual self-interest in markets can lead to positive social outcomes.

Market Failures

Situations where markets fail to align self-interest with social interest, necessitating government intervention.

Scarcity

A condition where resources are insufficient to satisfy all human wants.

Opportunity Cost

The value of the next-best alternative given up when a choice is made.

Economic Growth

An increase in the production of goods and services in an economy over time.

Consumer Surplus

The difference between the maximum price a consumer is willing to pay and the actual market price.

Producer Surplus

The difference between the market price and the minimum price at which a producer is willing to sell.

Comparative Advantage

The ability to produce a good or service at a lower opportunity cost than another producer.

Normal Goods

Goods for which demand increases as income rises.

Inferior Goods

Goods for which demand decreases as income rises.

Equilibrium Price

The price at which quantity demanded equals quantity supplied.

Surplus

Occurs when quantity supplied is greater than quantity demanded.

Shortage

Occurs when quantity demanded is greater than quantity supplied.

Free Markets

Markets that maximize total surplus through voluntary exchange.

Supply Curve

A function showing the quantity supplied at different prices.

Demand Curve

A function that shows the quantity demanded at different prices.

Fiscal Policy

Government adjustments in spending and taxation to influence the economy.

Monetary Policy

Central bank actions that manage the money supply to steer the economy.

Trade-offs

The alternatives that must be given up when choosing one option over another.

Economic Booms

Periods of significant output within an economy.

Economic Busts

Periods of decreased economic output and rising unemployment.

Wages and Productivity

Higher productivity generally leads to higher wages.

Division of Knowledge

The expansion of societal knowledge through specialization and trade.

Taxes and Subsidies

Government financial interventions that influence production costs.

Expectations (in economics)

Consumer and producer anticipations regarding future conditions that impact demand and supply respectively.