Economics
The everyday business of life. A social science that studies the decisions people make when faced with scarce resources. In particular, economics is about decisions related to the production, distribution, and consumption of goods and services. (The study of how people deal with scarcity; the study of decision-making; choices)
Demand
The quantity of a good or service that buyers are willing and able to buy at all possible prices during a certain time period.
Demand Curve
The graphic representation of the quantity of a good or service that buyers are willing and able to buy at all possible prices during a certain time period.
Supply
The quantity of a good or service that producers are willing and able to sell at all possible prices during a certain time period.
Supply Curve
The graphic representation of the quantity of a good or service that producers are willing and able to sell at all possible prices during a certain time period.
Deflation
A general, sustained downward movement of prices for goods and services in an economy.
Inflation
A general, sustained upward movement of prices for goods and services in an economy. (Rise in prices)
Macroeconomics
The study of the broad economy, such as how an economy grows and how growth is maintained.
Microeconomics
The study of the markets that make up the broad economy. (The study in economics that looks into the individual)
Elasticity of Demand
The ratio of the percentage change in quantity demanded of a good or service to the percentage change in its price; a measure of the responsiveness of buyers to a change in the price of a good or service.
Equilibrium Wage
The wage at which the quantity of labor supplied and quantity of labor demanded are equal.
Equilibrium Price
The price at which the quantity supplied and quantity demanded are equal. The point at which the supply and demand curves intersect.
Factors of Production
The natural, human, and capital resources that are available to make goods and services. Also known as productive resources.
Labor
The quantity and quality of human effort directed toward producing goods and services. Also known as human resources.
Land
Things that occur naturally in and on the earth that are used to produce goods and services.
Scarcity
The condition that exists because there are not enough resources to produce everyone's wants.
Goods
Objects that satisfy people's wants. Examples: clothes or shoes
Services
Actions that can satisfy people's wants.
Needs
Highly prioritized wants. (food, water, shelter)
Wants
Desires that can be satisfied by consuming goods and services. (Things that you would like, but don’t need)
Natural Resources
Things that occur naturally in and on the earth that are used to produce goods and services. (Example: land, forests, water)
Human Resources
The quantity and quality of human effort directed toward producing goods and services. Also known as labor.
Alternatives
The different possibilities to choose from in a given situation.
Trade-Off
Giving up some of one thing in order to gain some of something else. (Giving up one alternative for another)
Command Economy
An economic system where the government owns the resources and decides what goods and services are produced, how they are produced, and who gets them. The government decides the prices of goods, services, and resources.
Resources
The natural, capital, and human resources used to produce goods and services. Also known as productive resources. (the materials from which goods and services are made)
Opportunity Cost
The value of the next-best alternative when a decision is made; it's what is given up. The most valuable choice (in terms of money, time, goods, and services given up) available that you DID NOT choose.
Costs
Things unfavorable to a decision maker. (The value of time, money, goods, and services given up in an economic choice.)
Adam Smith
The father of modern economics
3 Economic Questions
What goods and services will be produced? How will the goods and services be produced? Who will receive / benefit from goods and services produced?