BASIC ECONOMICS TERMS
The study of how people make choices when resources are limited.
What is Economics?
When the price of a good rises, the quantity demanded usually ______.
What is Decrease?
If you spend $20 on pizza instead of a movie ticket, the movie ticket is the ______.
What is the Opportunity Cost?
When price is above equilibrium, this occurs.
What is a Surplus?
Gas prices rising leads people to buy smaller cars. This shows ______.
What are Incentives?
This occurs when resources are limited but wants are unlimited.
What is Scarcity?
Goods that are used together, like peanut butter and jelly.
What are Complements?
Opportunity cost is always based on the next best ______.
What is Alternative?
When price is below equilibrium, this occurs.
What is a Shortage?
During the COVID pandemic, toilet paper shortages were an example of ______.
What is a Shortage?
Rewards or penalties that influence people's decisions.
What are Incentives?
When something other than price changes and the entire demand curve moves.
What is a Shift in Demand?
True or False: Opportunity cost always involves money.
What is False?
a term coined by Adam Smith, is the unobservable market force that drives supply and demand to reach equilibrium, where the quantity supplied equals the quantity demanded.
What is the invisible hand?
When avocados become expensive, people buy more tomatoes instead.
What are Substitutes?
The branch of economics that studies the economy as a whole (inflation, unemployment, GDP).
What is Macroeconomics?
When the price of a product increases, producers usually supply ______ of it.
What is More?
Opportunity cost helps economists understand how people deal with ______.
What is Scarcity?
The idea that people respond to incentives and act in their own self-interest.
What is Rational Decision Making?
A government tax on cigarettes is meant to reduce ______.
What is quantity demanded?
The additional cost or benefit of producing or consuming one more unit of something.
What is Marginal (marginal cost or marginal benefit)?
The price where quantity supplied equals quantity demanded.
What is Equilibrium Price?
A student spends the weekend studying instead of working a job that pays $150.
They also miss a concert they wanted to attend worth $50. What is the opportunity cost of studying?
What is $150 (the highest valued alternative)?
When producers respond to higher prices by producing more and consumers respond by buying less, this interaction pushes the market toward this condition.
What is Market Equilibrium?
When the government prints too much money and prices rise across the economy.
What is Inflation?