Introduction to Economics - Key Terms and Concepts

Flashcards covering key economic terms and concepts from an introductory economics lecture.

Economics

The study of how scarce/limited resources are used to satisfy unlimited wants.

Scarcity

The condition where limited resources cannot meet unlimited wants, forcing choices and tradeoffs.

Tradeoff

Giving up one thing for another due to scarcity.

Value Judgment

Subjective assessment influencing economic decisions.

Opportunity Cost

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

Efficiency

Using resources in the least costly way to achieve the largest output.

Equity

Fair distribution of resources, a major issue arising from scarcity.

Resources

Inputs used to create goods and services; also known as factors of production.

Labor

Human effort used in production; its income return is wages.

Capital

Produced goods used to make other goods; its income return is interest.

Land

Inputs from nature used in production; its income return is rent.

Entrepreneurship

Organizing activity and risk-bearing in production; its income return is profit.

Economic Theory

Cause-effect interpretation explaining why something happens in the economy.

Model

Simplified framework for theory, including variables, assumptions, data, and conclusions.

Economic Policy

Action taken to change economic conditions.

Graph

Visual representation showing the relationship between two variables.

Direct Relationship

Variables move in the same direction; upward slope on a graph.

Inverse Relationship

Variables move in opposite directions; downward slope on a graph.

Production Possibilities Curve

Shows tradeoffs when the economy is at full employment, indicating efficient production combinations.

Unemployment

Situation represented by points inside the production possibilities curve.

Economic Growth

Rightward shift of the production possibilities curve.

Macroeconomics

Deals with the U.S. economy as a whole and how households, businesses and the government interact.

Microeconomics

Deals with economics on a smaller scale; individual markets.