Chapter 1-7 Economics Vocabulary (Video)

A set of vocabulary flashcards covering key economic concepts from the lecture notes.

Economics

The study of scarcity and how societies allocate limited resources to produce and distribute final goods and services.

Scarcity

The condition that resources are limited relative to wants, so we cannot produce everything people want.

Land and natural resources

Resources found in nature (forests, water, oil, fish) used to produce goods and services.

Labor

Human effort, physical and mental, used in production; can be market or non-market work.

Capital

Physical tools, equipment, and facilities used to produce goods and services.

Entrepreneurship

The ability to organize resources, take risks, innovate, and start new ventures.

Good

A tangible item that can be touched and touched.

Service

An intangible action or performance that satisfies a want.

Trade-offs

The alternatives we give up when making a choice due to scarcity.

Guns versus butter

A classic trade-off between military spending and civilian goods; illustrates opportunity costs.

Opportunity cost

The value of the next-best alternative forgone when making a choice.

Foregone earnings

Income you give up by choosing one option over another (e.g., college vs work).

Sunk cost

Costs already incurred that cannot be recovered; should not affect current decisions.

Marginal cost

The additional cost of performing one more unit of an activity.

Marginal benefit

The additional benefit gained from one more unit of an activity.

Marginal analysis

Comparing marginal costs and marginal benefits to decide whether to undertake an action.

Incentives

Rewards or penalties that influence people's behavior and decisions.

Positive incentives

Rewards that encourage a behavior (e.g., bonuses, discounts).

Negative incentives

Penalties or costs that discourage a behavior (e.g., fines, higher prices).

No free lunch

The idea that there is always a cost to any choice; nothing is truly free.

Trade

Voluntary exchange between two or more parties that can make everyone better off.

Gains from trade

Increased total welfare resulting from specialization and exchange.

Specialization

Focusing on producing what one does best to increase efficiency and total output.