Basic Economic Terms

These flashcards cover key economic concepts taught in the lecture, focusing on definitions and examples.

Scarcity

The condition where unlimited wants exceed limited resources.

Opportunity cost

The value of the next best alternative given up when making a choice.

Supply

The amount of a good or service producers are willing and able to sell at various prices.

Demand

The amount of a good or service consumers are willing and able to buy at various prices.

Market equilibrium

The point where quantity supplied equals quantity demanded, with no shortage or surplus.

Surplus

When producers supply more of something than consumers want to buy at the current price.

Shortage

When consumers want to buy more of something than producers are willing to supply at the current price.

Price ceiling

A government-set maximum legal price, often below equilibrium, leading to shortages.

Price floor

A government-set minimum legal price, often above equilibrium, leading to surpluses.

Inflation

A sustained increase in the general price level of goods and services over time.

Deflation

A sustained decrease in the general price level, usually harmful to the economy.

GDP (Gross Domestic Product)

The total monetary value of all final goods and services produced in a country within a specific period.

Recession

A significant decline in economic activity typically lasting at least two consecutive quarters.

Unemployment rate

The percentage of the labor force that is jobless and actively looking for work.

Fiscal policy

Government decisions about spending and taxation to influence the economy.

Monetary policy

Actions by a central bank to control the money supply and interest rates.

Interest rate

The cost of borrowing money or the reward for saving/lending money, expressed as a percentage.

Price elasticity

A measure of how much quantity demanded or supplied changes when the price changes.

Marginal cost

The additional cost of producing one more unit of a good or service.

Externality

A cost or benefit affecting someone not directly involved in a transaction.