econ final

Scarcity

The idea that we cannot have everything we want; there are limits to resources.

Choice

The option you choose when making a decision.

Trade-off

All options available when making a decision; giving up one thing for another.

Opportunity cost

The next best alternative you did not choose in your trade-off.

Economic Efficiency

Keeping production costs as low as possible.

Economic Equity

Doing what is fair, like ensuring equal opportunity and distribution of income.

Economic Freedom

Allowing individual choice in economic decisions.

Economic Growth

Increasing the production of goods and services over time.

Economic Security

Protecting consumers, producers, and resource owners from risk.

Economic Stability

Maintaining stable employment and smooth economic growth.

Factors of Production

Resources needed to produce goods and services, including land, labor, capital, and entrepreneurship.

Market Structures

Describe how businesses are organized based on the number of sellers, types of products, and competition.

Perfect Competition

A market structure with many small firms, identical products, and no control over price.

Monopolistic Competition

A market structure with many firms offering differentiated products and some control over price.

Oligopoly

A market structure with a few large firms dominating the market, with high barriers to entry.

Monopoly

A market structure where one large firm controls the entire market with a unique product.

Sole Proprietorship

A business owned and controlled by one person.

Partnership

A business co-owned by two or more people.

Corporation

A business owned by stockholders who enjoy limited liability.

Law of Demand

The inverse relationship between price and quantity demanded.

Law of Supply

The direct relationship between quantity supplied and price.

Equilibrium

The point where quantity supplied and quantity demanded are equal.

Elastic Demand

Demand that changes significantly with price changes.

Inelastic Demand

Demand that changes little due to price changes.

Public Good

A good that is non-rivalrous and non-excludable.

Private Good

A good that is both rivalrous and excludable.

Interest Rate

The cost of borrowing money, usually expressed as a percentage.

Insurance

A financial product to protect against financial loss.

Progressive Tax

A tax system where the tax rate increases as income increases.

Regressive Tax

A tax system where the tax rate decreases as income increases.

Proportional Tax

A tax system where the tax rate remains the same regardless of income.

Fiscal Policy

Government actions regarding taxation and spending to influence the economy.

Monetary Policy

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

Trade Barrier

Laws that restrict foreign goods from entering a country.

Free Trade Agreement

A pact between countries to reduce or eliminate trade barriers.

Protectionism

Economic policy to shield domestic industries from foreign competition.

Business Cycle

Fluctuations in economic activity characterized by expansion and contraction phases.

Cyclical Unemployment

Unemployment caused by recession.

Structural Unemployment

Unemployment due to a mismatch between skills and job opportunities.

Frictional Unemployment

Temporary unemployment while transitioning between jobs.

Seasonal Unemployment

Unemployment related to seasonal work availability.

Opportunity Cost

The value of the next best alternative that is foregone when making a decision.

Credit Score

A numerical representation of a borrower’s creditworthiness.

PPC

Production Possibility Curve; shows trade-off between the production of two goods.

Absolute Advantage

The ability of a country to produce more of a good using the same resources as another country.

Comparative Advantage

The ability to produce a good at a lower opportunity cost than another producer.