Macro Economics

lalalalalallalalalalalalalalalalalalalalalalalalalalalalala

Goods

Anything from which individuals receive utility or satisfaction

Utility

The satisfaction one receives from a good

Bad

Anything from which individuals receive disutility or dissatisfaction

Disutility

The dissatisfaction one receives from a bad

Land

All natural resources, such as minerals, forests, water, and unimproved land

Labor

The physical and mental talents of people contribute to the production process

Capital

Produced goods that can be used as inputs for further production, such as factories, machinery, tools, computers, and buildings

Entrepreneurship

The particular talent that some people have for organizing resources of land, labor, and capital to produce goods, seeking new business opportunities, and developing new ways of doing things

Scarcity

The condition in which wants are greater than the limited resources available to satisfy those wants

Economics

The science of scarcity, dealing with how individuals and societies manage wants exceeding available resources

Rationing Device

A means of deciding who gets what of available resources and goods, such as dollar prices

Opportunity Cost (Consumer)

The most highly valued opportunity forfeited when a choice is made, influencing behavior based on the cost

Marginal Benefits

Additional benefits connected to consuming an additional unit of a good or undertaking one more unit of an activity

Marginal Costs

Additional costs connected to consuming an additional unit of a good or undertaking one more unit of an activity

Decisions at the Margin

Characterized by weighing additional benefits against additional costs with respect to current conditions

Efficiency

Achieved when marginal benefits and marginal costs intersect on a graph, representing the highest efficiency point

Incentives

Factors that encourage or motivate a person to take action

Unintended Effects

Positive or negative outcomes that were not anticipated

Exchange/Trade

The process of giving up one thing for another

Market and Government

Involve identifying, defining, and proposing solutions to problems, with either the market or government being responsible for the problem and providing a solution

Ceteris Paribus

A Latin term meaning all other things constant, used to examine the effect of one influence on an outcome while holding all other influences constant

Theory

An abstract representation of the real world designed to better understand it

Positive Economics

The study of 'what is' in economic matters, focusing on cause and effect

Normative Economics

The study of 'what should be' in economic matters, involving judgment and opinion

Microeconomics

Deals with human behavior and choices at a small scale, such as individual, business, firm, industry, or single market

Macroeconomics

Deals with human behavior and choices at a large scale, such as aggregate markets or the entire economy

Production Possibilities Frontier

Represents possible combinations of two goods that can be produced under given conditions of technology and resources

Constant Opportunity Costs

Opportunity cost that remains the same throughout production, showing a linear relationship

Increasing Opportunity Costs

Opportunity cost that rises as more of a good is produced, exhibiting an exponential relationship

Production Efficiency

Condition where maximum output is produced with given resources and technology

Productive Inefficiency

Condition where less than maximum output is produced with given resources and technology

Technology

Body of skills and knowledge involved in production, advancing production capabilities

Attainable Regions of Production

Points below the production possibilities frontier where production is possible but inefficient

Unattainable Region of Production

Points above the production possibilities frontier where production is not feasible due to resource limitations

Opportunity cost (Producer)

The value of what is forfeited to produce another good, influencing production decisions

Unemployment

An inefficient point of production, indicating resources are not fully utilized

Economic Growth within a PPF Framework

An increase in resources or an advance in technology capable of increasing production, visibly seen as a shift in the PPF line to the right where both minimum values increase for x and y.

Comparative Advantage

A situation where someone can produce a good at a lower opportunity cost.

Specialization

Producing goods in which you have a comparative advantage compared to other people, sellers, or businesses.

Ex Ante

Phrase that means before, before a trade.

Ex Post

Phrase that means after, after a trade.

Market

Any place people come together to trade, can be physical or virtual locations.

Demand

The willingness and ability of buyers to purchase varying quantities of goods at different prices and during specific time periods.

Quantity demanded

The number of units that individuals are willing to pay at a particular price, considering the willingness and ability of customers to buy at different prices.

Demand Schedule

The numerical tabulation of the quantity demanded of a good at different prices, representing the law of demand through numbers.

Downward Slopping Demand Curve

The graphical representation of the demand schedule and law of demand.

Diminishing Marginal Utility

States that the marginal utility gained by consuming equal successive units of a good will decline as the amount consumed increases.

Supply

The willingness and ability of sellers to produce and offer to sell different quantities of a good at different prices during a specific time period.

Law of Supply

As the price of a good rises, the quantity supplied of the good rises, and as the price of a good falls, the quantity supplied of the good falls.

Supply Schedule

The numerical tabulation of the quantity supplied of a good at different prices, a numerical representation of the law of supply.

Shift in Supply

The supply of a good can rise or fall, impacting the quantity supplied at all prices due to various factors like prices of resources, tech, prices of other goods, etc.

Subsidy

Monetary payments by the government to a producer of a good or service, encouraging production and creating a rightward shift in the supply curve.

Change in Quantity Supplied

A movement along a supply curve caused directly by a change in the price of the good.

Market Equilibrium

The price-quantity combination where supply and demand intersect, representing a balance in the market.

Surplus

A condition where the quantity supplied is greater than the quantity demanded, occurring when prices are above equilibrium price.

Shortage

A condition where the quantity demanded is greater than the quantity supplied, occurring when prices are below the equilibrium price.

Equilibrium price

The price at which the quantity demanded equals the quantity supplied, the intersection point of supply and demand lines.

Equilibrium Quantity

The quantity corresponding to the equilibrium price, where buyers and sellers are willing and able to transact.

Disequilibrium

An imbalance in the market, either as a surplus or shortage.

Consumer Surplus

The difference between the maximum price a consumer is willing to pay and the price they actually pay.

Producer Surplus

The difference between the minimum price a producer is willing to sell for and the price they actually receive.

Total Surplus

The combination of consumer and producer surplus in a market.

Transmitter

A means of communicating information, prices can transmit scarcity, surplus, etc.

Price Ceiling

A government-mandated maximum price control that can lead to shortages and less exchange if set below equilibrium.

Price Floor

A government-mandated minimum price control that can cause surpluses and fewer exchanges if set above equilibrium.

Deadweight Loss

Loss of efficiency when equilibrium isn't met, often represented in graphs.

Absolute (Money) Price

The price of a good in monetary terms.

Relative Price (opportunity cost)

The price of a good in terms of another good, found by dividing both values.

Individual Demand Curve

Focuses on the price-quantity of a single person/buyer

Market Demand Curve

Represents the price-quantity combination of a good for all buyers

Change in Demand

a shift of the demand curve, which changes the quantity demanded at any given price

Normal Good

a good that consumers demand more of when their incomes increase

Inferior Good

A good the demand for which falls as income rises

Neutral Good

A good the demand for which does not change as income rises or falls

Substitutes

Two goods that satisfy similar needs or desires. The demand for one rises as the price of the other rises.

Complements

Two goods that are used jointly in consumption. If two goods are complements, the demand for one rises as the price of the other falls.