4 Key Terms
Key Terms
Ceteris paribus
The biggest assumption in Economics meaning “other things being equal.”
Economics
The study of how humans make choices under conditions of scarcity.
Globalization
The trend in which buying and selling in markets have increasingly crossed national borders.
Factors of production
Include land, labor capital, and entrepreneurial ability.
Goods and services market
A market in which firms are sellers of what they produce and households are buyers.
Invisible hand
Idea that self-interested behavior by individuals can lead to positive social outcomes.
Macroeconomics
The branch of economics that focuses on broad issues such as growth, unemployment, inflation, and trade balance.
Market economy
An economy where economic decisions are decentralized, resources are owned by private individuals, and businesses supply goods and services based on demand.
Market
Interaction between potential buyers and sellers; a combination of demand and supply.
Microeconomics
The branch of economics that focuses on actions of particular agents within the economy, like households, workers, and business firms.
Scarcity
When human wants for goods and services exceed the available supply.
Theory
A representation of an object or situation that is simplified, while including enough of the key features to help us understand the object or situation.
Opportunity cost
Measures cost by what is given up in exchange; opportunity cost measures the value of the forgone alternative. (1)