Opportunity Cost

1. The value of the next best option sacrificed for a chosen option.The cost of NOT choosing the “best” alternative.

Trade-off

1. All the options given up when a decision is made.

Scarcity

1. Desirable items are in limited supply

Choice

1. Deciding how best to use limited resources

Marginal Cost

1. Cost incurred from one more item

Marginal Benefit

1. Benefit gained from one more item

Utility

1. Usefulness or value surrounding a decision

Diminishing Marginal Return / Utility

1. Adding more reaches a point where the return becomes negative

Factors of Production

1. Because of scarcity, no society has enough resources to produce everything it wants.  Resources are the basic categories of inputs used to produce goods and services.

Land

1. Having the actual space to perform production.  Physical land to build production and distribution facilities or the physical space within those facilities.

Labor 

1. Having a skilled / educated workforce to be able to complete tasks associated with specific jobs

Capital

1. Monetary resources to start, maintain and expand production. - Cash, credit, machinery, raw materials

Entrepreneurship

1. Having the desire, skills, insight to start a business.

Competition

1. rivalry among sellers in the same market to win customers

Perfect Competition

1. Many producers supply and sell identical products or services. Prices determined by supply and demand. Example: farmers market

Monopolistic competition

1. Market structure characterized by many small sellers, varied products, and easy market entry. Example: Restaurants (slightly different products, all trying to monopolize you)

Oligopoly

1. Few producers dominate the market and produce similar or identical goods or services. Examples: Airline, Automobile, Technology, Soft Drink Industry

Monopoly

1. Single producer supplies a product or service for which there are no close substitutes.

2. Price

   1. the amount of money that is needed to pay for or buy something

1. Revenue

   1. income that a business has from its normal business activities (the sale of goods and services to customers), (price * quantity)

2. Cost

   1. the value a producer gives up to produce the good, (cost * quantity)

3. Profit

   1. the total revenue a firm receives from selling its products minus the total cost of producing it (revenue - costs)

4. Break EvenPoint

   1. the point at which you have made enough to cover the cost of making the good or service (revenue = costs)

5. Supply

   1. the amount of goods and services a producer makes available at a given price

6. Demand

   1. the amount of goods and services customers are willing and able to buy at a given price

7. Law of Demand

   1. There is an inverse relationship between the price of a good or service and the quantity buyers purchase.

8. Law of Supply

   1. A direct relationship between price and quantity: quantities respond in the same direction as price changes.

9. Equilibrium Price

   1. The market price where the quantity of goods supplied is equal to the quantity of goods demanded. This is the point at which the demand and supply curves in the market intersect.

10. Price elasticity

    1. how the fluctuation in price impacts demand

    2. Elastic Demand

       1. When one can of coke goes up 10%, demand falls by 10%

       2. There are substitute products

    3. Inelastic Demand

       1. When 1 carton of milk goes up 10%, demand hardly changes

       2. There are no substitute products

    4. Very Inelastic Demand

       1. When spa treatments rise by 10%, demand falls by 20%

       2. A spa is a non-essential item

11. Productivity

    1. the value of outputs that can be produced by a given amount of input 

12. Standard of Living

    1. the level of wealth, comfort, material goods, 

    2. and necessities available to a certain socioeconomic class in a certain geographic area, usually a country

13. Cost of Production

    1. the total of certain costs associated with the production of goods. 

14. Demand Shifters

    1. Number of Buyers

       1. Adding more consumers either by increase in population or expansion into different markets. More consumers= more demand (shift right). 

    2. Tastes/Preference

       1. A favorable (or unfavorable) change in consumer tastes shifts the demand curve.

    3. Income Effect

       1. An increase in income can cause consumers to buy more - Normal goods A decrease in income could result in inferior good purchases.

    4. Expectations of Buyers

       1. Consumers anticipate future changes in price

          1. Gas prices are expected to increase

          2. Threat of bad weather

          3. War breaks out

    5. Price of related Goods/Competition

       1. Influence of other prices on the demand curve.

Behavioral economics: The study of consumer choices, market events and human psychology to help understand their decisions and to try to make more accurate economic models.

Herd Mentality

1. The tendency to conform to the behaviors/beliefs of the people around you

FOMO

1. The tendency to feel anxiety/fear that an exciting or interesting event may currently be happening elsewhere, often aroused by posts seen on a social media website

Loss Aversion

1. The tendency to regard losses as considerably more important than gains of comparable magnitude

Confirmation bias

1. people tend to seek out and interpret information in ways that confirm what they already believe.

Misinformation effect

1. When you remember an event, your perception of it can be altered if you later receive misinformation about the event. In other words, if you learn something new about an event you saw, it can change how you remember the event, even if what you are told is unrelated or untrue

Overconfidence bias

1. The tendency people have to be more confident in their own abilities

Halo effect

1. If you are under the influence of a halo effect bias, your general impression of a person is being unduly shaped by a single characteristic.  One of the most influential characteristics? Beauty. People routinely see attractive people as more intelligent and conscientious than their actual academic performance indicates.