BUS115 - Introduction to Economics

Vocabulary terms from the BUS115 economics lecture notes focusing on fundamental economic concepts.

Tradeoff

A situation where choosing one option requires giving up another.

Opportunity Cost

The value of the best alternative that is forgone when making a choice.

Scarcity

A condition where resources are limited relative to wants.

Marginal Analysis

An examination of the additional benefits of an activity compared to the additional costs incurred.

Sunk Cost Fallacy

The tendency to consider past investments when making current decisions, despite those costs being unrecoverable.

Consumer Surplus

The difference between what consumers are willing to pay for a good and what they actually pay.

Producer Surplus

The difference between what producers are willing to accept for a good and the price they actually receive.

Market Equilibrium

A situation where the quantity demanded equals the quantity supplied at a specific price.

Demand Curve

A graph showing the relationship between the price of a good and the quantity demanded.

Supply Curve

A graph showing the relationship between the price of a good and the quantity supplied.

Efficiency in Economics

A situation where resources are allocated in a way that maximizes total surplus.

Determinants of Demand

Factors that cause the demand curve to shift, including consumer income, tastes, and prices of related goods.

Determinants of Supply

Factors that cause the supply curve to shift, including production costs, technology, and number of sellers.

Positive Analysis

An objective analysis that describes how things are, without making judgments about whether they are good or bad.

Normative Analysis

A subjective analysis that involves judgments about what ought to be.

Willingness to Pay

The maximum price a consumer is willing to pay for a good.

Price Elasticity of Demand

A measure of how much the quantity demanded of a good responds to a change in its price.

Implicit Costs

Costs that represent forgone opportunities, not out-of-pocket expenses.

Explicit Costs

Direct, out-of-pocket payments for expenses.