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incentive
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A reward given that encourages an action or a penalty that discourages one.
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scarcity
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Inability to get everything we want.
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economics
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The social science that studies the choices that individuals, businesses, governments, and entire societies make as they cope with scarcity and the incentives that influence and reconcile those choices.
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microeconomics
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The study of the choices that individuals and businesses make, the way these choices interact in markets, and the influence of governments.
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macroeconomics
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The study of the performance of the national economy and the global economy.
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goods
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Physical objects that satisfy people's wants.
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services
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Tasks performed performed for people.
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land, labor, capital, entrepreneurship
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Factors of production
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land
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natural resources, earns rent
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labor
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The work time and work effort that people devote to producing goods and services, earns wages.
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human capital
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The knowledge and skill that people obtain from education, on-the-job training, and work experience.
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capital
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The tools, instruments, machines, buildings, and other constructions that businesses use to produce goods and services, earns interest.
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entrepreneurship
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The human resource that organizes labor, land, and capital. Drivers of economic progress. Earns profit.
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financial capital
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money, stocks, bonds are examples
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self interest
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best option for yourself
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social interest
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Choices that are the best ones for a society as a whole.
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efficient
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If not possible to make something better off without making someone else worse off.
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tradeoff
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Giving up one thing to get something else.
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rational
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Choice that compares costs and benefits and achieves the greatest benefit over cost for the person making the choice.
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benefit
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Gain or pleasure that something brings.
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preferences
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What a person likes and dislikes and the intensity of those feelings.
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opportunity cost
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Highest valued alternative that must be given up to get it.
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margin
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When a choice is made by comparing a little more of something with its cost.
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marginal benefit
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The benefit that arises from an increase in an activity.
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marginal cost
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The opportunity cost of an increase in an activity.
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positive
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A factual statement.
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normative
answer
An opinionated statement.
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economic model
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A description of some aspect of the economic world that includes only those features that are needed for the purpose at hand.
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