Motivating the Economic Problem - ECO 2023

A set of vocabulary flashcards covering key concepts from the lecture on Introductory Microeconomics.

Economic Problem

The recognition that resources are scarce, leading to the need for choices and trade-offs.

Scarcity

Not having enough of the items we find desirable to satisfy our unlimited wants.

Opportunity Cost

The forgone value of the next-best alternative when a decision is made.

Incentives

Factors that motivate individuals to perform an action.

Trade-offs

The consideration of what must be given up when a decision is made.

Marginal Thinking

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

Positive Statement

A statement that can be tested and validated.

Normative Statement

A statement that expresses a value judgment about whether a situation is desirable or undesirable.

Economic Systems

Ways in which societies organize the production and distribution of goods and services.

Capitalism

An economic system based on private property and market forces where individuals act in their self-interest.

Socialism

An economic system where the state owns the means of production, aimed at promoting equality.

Feudalism

An economic system based on rigid hierarchies and tradition, dominant in medieval Europe.

Mercantilism

An economic system where government regulates trade and commerce to increase national wealth.

Theory

A structured explanation based on observation that predicts how phenomena interact.

Refutability

The principle that a good theory must be able to be proven false.

Price

The ratio at which two goods are exchanged in a market.

Carbon Tax

A tax implemented on carbon emissions, intended to reduce carbon output by increasing cost.

Competition

The struggle among individuals for scarce resources, leading to various strategies to mitigate scarcity.