Economic terms
Profit
What is the financial gain after all costs are subtracted from revenue
Resources
What are the inputs used to produce goods and services?
Private Property
What is the legal right of an individual to own and control resources
The Law of Demand
$↑Qd↓
Buyer
A person or group who wants to purchase a good or service
Competition
What is rivalry among sellers?
Opportunity Cost
What is the value of the next-best alternative that must be given up when a choice is made
Monetary Incentive
A financial reward or penalty
The Law of Supply
$↑Qs↑
Consumer Behavior
The way people choose to buy or use products and services
Choice
What is the act of selecting among alternatives because scarcity makes it impossible to have everything.
Marginal Benefit
What is the additional satisfaction or utility gained from consuming one more unit of a good or service
Nonmonetary Incentive
A non-financial reward or penalty
Demand Curve
A graph that shows how many units of a good or service consumers are willing and able to buy at different prices
Decrease in Demand (Shift Left)
Consumers are willing and able to buy less at every price
Wants
What are the things people desire for satisfaction
Marginal Cost
What is the additional cost incurred from producing or consuming one more unit of a good or service
Decentralized Decision-Making
Economic decisions are made by millions of individual buyers and sellers, rather than by a central authority
Supply Curve
A graph that shows how many units of a good or service producers are willing and able to sell at different prices
Increase in Supply (Shift Right)
Producers are willing and able to offer more for sale at every price
Economics
What is the study of how people, businesses, and governments make choices to satisfy their wants in a world where resources are limited.
Scarcity
What is the fundamental economic problem that exists because human wants are virtually unlimited, but the resources available to satisfy them are limited.
Invisible Hand
Adam Smith's concept that individuals pursuing their own self-interest in a free market unintentionally lead to positive outcomes for society as a whole
Movement Along the Curve
A change in quantity demanded or quantity supplied caused only by a change in the product's price
Shortage
A situation where quantity demanded is greater than quantity supplied at a given price