Economic basics
Terms
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- economic system
- the combination of social and individual decision making a society uses to answer the three economic questions
- unlimited wants and needs
- the human characteristics of never having all wants and needs satisfied
- opportunity benefit
- what is gained by making a particular choice
- allocation
- the process of choosing which needs wil be satisfied and how much of our resources we will use to satisfy them
- opportunity cost
- the value of any alternative that you must give up when you make a choice
- economic incentive
- the increase in personal satisfaction that may result from some economic activity
- macroeconomics
- the branch of economics that examines the behavior of the whole economy at once
- util
- the unit of measurement for utility
- theory
- a simplified description of reality
- market economy
- an economy in which the economic questions are decided mostly by individuals in the marketplace
- economics
- social science that deals with how society allocates its scarce resources among its unlimited wants and needs
- budget constraint
- the mix of goods that can be purchased with a limited amount of income
- invisible hand
- the incentive that guides individuals o choose in the best interest of society by pursuing their own self-intrests
- economic profit
- the difference between the money you obtain from selling a product and the cost of producing the product
- individual choice
- decisions made by people acting separately
- psychic income
- the nonmonetary reward we get from taking some action
- limited resources
- the condition of there not being enough resources to fulfill all wants and needs
- utility
- the satisfaction one receives from the consumption, use, or ownership of a good or service
- microeconomics
- the branch of ecoomics that examies the choices of individuals concerning one product, one firm, or one industry
- scarity
- the condition that occurs because people's wants and needs are unlimited, while the resources needed to produce goods and services to meet these wants and needs are limited