micro econ

Scarcity

Limited amount of resources; without scarcity, there would be no economics.

Economics

The study of how individuals and society allocate their scarce resources.

Microeconomics

The study of individual units that make up the economy, focusing on households, firms, and specific markets.

Macroeconomics

The study of the overall aspects of the economy, such as national output growth.

Inflation

An increase in the aggregate price level.

Incentives

Anything that motivates people to act, which can be positive or negative.

Positive Incentives

Encourages action by offering rewards or payments.

Negative Incentives

Discourages actions by providing undesirable consequences or punishment.

Direct Incentives

Clear motivation aimed at influencing a specific behavior.

Indirect Incentives

A secondary change in behavior brought on by the original incentives, potentially creating unintended consequences.

Trade-offs

Because of scarcity, people face trade-offs; doing one thing means not having the time, resources, or energy to do something else.

Comparative Advantage

The situation in which an individual, business, or country can produce at a lower opportunity cost than a competitor.

Opportunity Cost

What you must give up in order to get something; the next best forgone alternative.

Marginal Thinking

The analysis of the additional benefits of an activity compared to the additional costs.

Trade Creates Value

The principle that exchanging goods or services can lead to increased value for all parties involved.