Fundamental Concepts
The study of how people, businesses, and governments make choices to satisfy their wants in a world where resources are limited
What is Economics?
The act of selecting among alternatives because you cannot have everything.
What is Choice?
A reward or penalty that encourages people to make certain choices.
What is an Incentive?
A graph that shows how many units of a good or service producers are willing and able to sell at different prices.
What is a Supply Curve?
The price where the demand curve and supply curve intersect, meaning the quantity demanded equals the quantity supplied.
What is the Equilibrium Price?
The fundamental economic problem that exists because human wants are virtually unlimited, but resources are limited
What is Scarcity?
The value of going to the movies with friends, when you choose to attend a concert instead.
What is Opportunity Cost?
A financial reward or penalty, such as a cash bonus for good performance or a tax.
What is a Monetary Incentive?
A graph that shows how many units of a good or service consumers are willing and able to buy at different prices.
What is a Demand Curve?
A change in the quantity demanded or quantity supplied that is caused only by a change in the product's price.
What is Movement Along the Curve?
The rivalry among sellers that leads to lower prices, better products, and more choices for consumers.
What is Competition?
The additional cost a company incurs for producing just one more unit of a product.
What is Marginal Cost?
The legal right of an individual to own and control resources, giving them a reason to invest in and care for what they own.
What is Private Property?
The specific amount consumers are willing to buy at a particular price, shown as a single point on the demand curve.
What is Quantity Demanded?
A change in the entire relationship between price and quantity caused by a factor other than the product's price.
What is Shift of the Curve?
An entrepreneur's goal of making a financial gain after all costs are subtracted from revenue.
What is Profit?
The additional satisfaction or utility gained from consuming one more unit of a good or service.
What is Marginal Benefit?
The freedom of individuals to make their own economic decisions without undue government interference.
What is Economic Freedom?
The specific amount producers are willing to sell at a particular price, shown as a single point on the supply curve.
What is Quantity Supplied?
A situation where the quantity demanded is greater than the quantity supplied at a given price.
What is a Shortage?
The inputs used to produce goods and services, such as land, labor, and capital.
What are Resources?
The freedom of individuals to live their lives as they choose, including freedoms of speech, assembly, and belief.
What is Personal Liberty?
Adam Smith's concept that individuals pursuing their own self-interest unintentionally lead to positive outcomes for society as a whole.
What is the Invisible Hand?
The principle stating that as the price of an item goes up, the quantity that people are willing to buy goes down.
What is the Law of Demand?
A situation where the quantity supplied is greater than the quantity demanded at a given price.
What is a Surplus?