Basic Economic Concepts
This social science studies how individuals and societies make choices about scarce resources.
What is economics?
These are things people desire but do not need to survive.
What are wants?
This branch of economics focuses on individual consumers, firms, and markets.
What is microeconomics?
This economic system is based on private ownership and voluntary exchange.
What is a market economy?
This curve shows the relationship between price and quantity consumers are willing to buy.
What is demand?
This fundamental economic problem exists because wants are unlimited but resources are limited.
What is scarcity?
This concept refers to decisions made at the margin, or small changes in choices.
What is marginal analysis?
This branch of economics studies the economy as a whole, including inflation and unemployment.
What is macroeconomics?
This is anything of value that a person or business owns.
What is an asset?
This curve shows the relationship between price and quantity producers are willing to sell.
What is supply?
This term describes the next best alternative that is given up when a choice is made.
What is opportunity cost?
This type of incentive encourages people to act in certain ways through rewards.
What is a positive incentive?
This is the total value of all final goods and services produced in a country in one year.
What is Gross Domestic Product (GDP)?
This term describes a general rise in prices over time, which reduces purchasing power.
What is inflation?
This point occurs where supply and demand intersect.
What is equilibrium?
These are things people must have to survive, such as food, water, and shelter.
What are needs?
Money paid to workers for their labor is called this.
What are wages?
This term describes goods that are used to produce other goods.
What are capital goods?
This term refers to an increase in the value of something, such as property or currency, over time.
What is appreciation?
This situation occurs when the quantity demanded is greater than the quantity supplied.
What is a shortage?