Economics
Key Concepts & Vocabulary 1
SCARCITY
The fundamental economic
problem – unlimited collective
human wants/needs, limited
resources. Therefore, we must
...
Opportunity Cost
The next best thing
that you would have
done with your
resource if you
hadn’t done what
you did with your...
PROFIT
Revenue - costs =
profit. What’s left
over after you’ve
paid all your costs.
WEALTH
Accumulated of
profit usually.
or accumulated
resources of
other types.
FACTORS OF
PRODUCTION
Land, labor, and
capital.
LAND
Parts of the physical non-human
universe used for production (soil,
sun, oil, etc.)
LABOR
Human work used to transform a part
of the non-human universe into a
product that can be bought or sold.
CAPITAL
The means of production needed to make the
production and selling possible – including the
wages to hire the labor...
COMMODITY
Anything that can be bought or sold.
Especially something that is
interchangeable with no qualitative
difference...
MARKET
Any situation in which buyers
and sellers can do what they
do.
FREE MARKET
Usually used to describe a market
without government intervention. May
sometimes be used to describe a
market ...
CAPITALISM (1)
An economic system based on the
private ownership of wealth and the
profit motive and market mechanisms
of ...
Capitalism (2)
A system of tremendous
productivity based on the
transformation of human
beings into rented
machines who la...
PERFECT/PURE COMPETITION
An “ideal” situation in which infinite
numbers of buyers compete for
infinite numbers of sellers,...
PROFIT-MOTIVE
Capitalists make &
improve businesses
based on desire for
wealth.
INVISIBLE
HAND
HAND
Used by Adam Smith to describe
the “magical” dynamic of markets
springing into existence, laborers
see...
ECONOMICS
Key Economics Vocabulary
& Concepts 2
CETERIS
PARIBUS
All else remaining
equal. Everything,
but the variables
being discussed,
held constant.
MAXIMIZER
MAXIMIZER
The classical economics
view of humans is as
rational actors who
calculate and act based
on their own ...
COMPARATIVE
ADVANTAGE
Holding costs of
production constant,
the ability of one
participant in a market
to produce more tha...
UTILITY
Satisfaction of desires.
The benefit or pleasure
gained from an action.
MARGINAL
The additional
increment. The “extra”
or “next” or “previous”
increment.
ELASTICITY
A measurement of
how the price of a
commodity affects
demand or supply.
RESOURCE
SUBSTITUTION
SUBSTITUTION
The tendency of market actors to prefer
a roughly equivalent factor for more
expensive ...
MONEY
Anything which can be
generally traded for other
goods and services.
Most modern economies
use “fiat currency” (in
w...
EXTERNALITY
The effect on
others of
economic actions.
REGULATION
Efforts by governments to
restrict the economic
activity of market
participants to minimize
negative externalit...
LABOR
UNION
An organization of
workers banded together
to improve their situation,
particularly against the
capitalist bos...
MINIMUM
WAGE
The creation of a
standard wage below
which firms aren’t
allowed to hire
workers.
GOOD
GOOD
A positive
situation that
benefits society as
a whole.
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Econ 101 1a whole

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Econ 101 1a whole

  1. 1. Economics Key Concepts & Vocabulary 1
  2. 2. SCARCITY The fundamental economic problem – unlimited collective human wants/needs, limited resources. Therefore, we must make choices and prioritize what to produce/distribute/consume.
  3. 3. Opportunity Cost The next best thing that you would have done with your resource if you hadn’t done what you did with your resource.
  4. 4. PROFIT Revenue - costs = profit. What’s left over after you’ve paid all your costs.
  5. 5. WEALTH Accumulated of profit usually. or accumulated resources of other types.
  6. 6. FACTORS OF PRODUCTION Land, labor, and capital.
  7. 7. LAND Parts of the physical non-human universe used for production (soil, sun, oil, etc.)
  8. 8. LABOR Human work used to transform a part of the non-human universe into a product that can be bought or sold.
  9. 9. CAPITAL The means of production needed to make the production and selling possible – including the wages to hire the laborer (financial capital), the tools for the laborer to use, the road to transport the product (fixed capital). Capital is wealth invested to make more profit.
  10. 10. COMMODITY Anything that can be bought or sold. Especially something that is interchangeable with no qualitative differences (e.g. #2 corn).
  11. 11. MARKET Any situation in which buyers and sellers can do what they do.
  12. 12. FREE MARKET Usually used to describe a market without government intervention. May sometimes be used to describe a market undominated by any concentration of power.
  13. 13. CAPITALISM (1) An economic system based on the private ownership of wealth and the profit motive and market mechanisms of labor, production, consumption, etc.
  14. 14. Capitalism (2) A system of tremendous productivity based on the transformation of human beings into rented machines who labor for the profit of the wealthy.
  15. 15. PERFECT/PURE COMPETITION An “ideal” situation in which infinite numbers of buyers compete for infinite numbers of sellers, with perfectly interchangeable products, and perfectly shared information, no barriers to entry, etc. In other words, no participants in the market can ALTER the market.
  16. 16. PROFIT-MOTIVE Capitalists make & improve businesses based on desire for wealth.
  17. 17. INVISIBLE HAND HAND Used by Adam Smith to describe the “magical” dynamic of markets springing into existence, laborers seeking jobs, successful firms hiring laborers, buying and selling – all as if organized by some power, but actually coordinated by peoples’ own self-interest.
  18. 18. ECONOMICS Key Economics Vocabulary & Concepts 2
  19. 19. CETERIS PARIBUS All else remaining equal. Everything, but the variables being discussed, held constant.
  20. 20. MAXIMIZER MAXIMIZER The classical economics view of humans is as rational actors who calculate and act based on their own (narrowly viewed) self-interest.
  21. 21. COMPARATIVE ADVANTAGE Holding costs of production constant, the ability of one participant in a market to produce more than another.
  22. 22. UTILITY Satisfaction of desires. The benefit or pleasure gained from an action.
  23. 23. MARGINAL The additional increment. The “extra” or “next” or “previous” increment.
  24. 24. ELASTICITY A measurement of how the price of a commodity affects demand or supply.
  25. 25. RESOURCE SUBSTITUTION SUBSTITUTION The tendency of market actors to prefer a roughly equivalent factor for more expensive ones.
  26. 26. MONEY Anything which can be generally traded for other goods and services. Most modern economies use “fiat currency” (in which the money has no intrinsic value).
  27. 27. EXTERNALITY The effect on others of economic actions.
  28. 28. REGULATION Efforts by governments to restrict the economic activity of market participants to minimize negative externalities or maximize positive ones.
  29. 29. LABOR UNION An organization of workers banded together to improve their situation, particularly against the capitalist boss(es) that profit from the workers’ labor.
  30. 30. MINIMUM WAGE The creation of a standard wage below which firms aren’t allowed to hire workers.
  31. 31. GOOD GOOD A positive situation that benefits society as a whole.

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