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Introduction to Economics definitions

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Terms in this set (15)

  • Scarcity
    A situation where resources are insufficient to satisfy all human wants, requiring choices about their allocation.
  • Trade-off
    A situation where obtaining one thing necessitates giving up another, reflecting the need to prioritize among alternatives.
  • Opportunity Cost
    The value of the next best alternative forgone when a choice is made, not just monetary but also time or experiences.
  • Resource
    An input such as time, money, or materials that is limited and used to fulfill various wants or needs.
  • Economics
    A social science focused on how individuals, institutions, and societies make decisions under conditions of limited means.
  • Microeconomics
    A branch examining choices and behaviors of individuals and businesses, including pricing, supply, and demand in specific markets.
  • Macroeconomics
    A field studying the economy as a whole, including national issues like inflation, unemployment, and economic growth.
  • Economic System
    A structure determining how a society allocates and distributes its limited resources, shaped by decision-makers.
  • Traditional Economy
    A system where customs, traditions, and long-standing practices guide resource allocation and production.
  • Command Economy
    A structure where a government or ruling authority directs production, distribution, and pricing decisions.
  • Market Economy
    A system where buyers and sellers interact freely, with voluntary exchanges and competition shaping outcomes.
  • Voluntary Exchange
    A process where individuals freely decide what to buy or sell, reflecting personal preferences and mutual benefit.
  • Competition
    A dynamic where producers strive to attract buyers by offering better prices or features, influencing market outcomes.
  • Inflation
    A general rise in price levels across an economy, affecting purchasing power and interest rates.
  • Unemployment
    A condition where individuals willing and able to work cannot find jobs, impacting overall economic health.