Economic Brain Stimulating: Vocab Refresher

Economic terms are used everyday, and you might vaguely know what they mean. I've put together some common vocabulary used to refresh your mind. A healthy brain stimulator!

1. Scarcity- Fundamental concept of economists that indicates that there is less of a good freely available from nature than people would like.
2. Resource- An input used to produce economic goods. Land, labor, skills, natural resources, and capitol are examples. Throughout history, people have struggled to transform available, but limited resources into things they would like to have - economic goods.
3. Opportunity Cost- The highest valued alternative that must be sacrificed as a result of choosing an option.
4. Economizing behavior- Choosing the option that offers the greatest benefit at the least possible cost.
5. Marginal- Term used to describe the effects of a change in the current situation. For example, a producer's marginal cost is at the cost of producing an additional unit of a product, given the producer's current facility and production rate.
6. Secondary effects - The indirect impact of an event or policy that may not be easily and immediately observable. In the area of policy these effects are often both unintended and overlooked.
7. Ceteris Paribus- A Latin term meaning "other things constant" used when the effect of one change is being described, recognizing that if other things changed, they also could affect the result. Economists often describe the effects of one change, knowing that in the real world, other things might change and also exert an effect.
8. Fallacy of Composition - Erroneous view that what is true for the individual or the part will also be true for eh group or whole.
9. Transaction costs - The time, effort, and other resources needed to search out, negotiate, and complete an exchange.
10. Private- property rights - private property rights that's are exclusively held by an owner and protected against invasion by others. Private property can be transferred, sold, or mortgaged at the owner's discretion.
11. Production possibilities curve- A curve that outlines all possible combinations of total output that could be produced, assuming 1. a fixed amount of productive resources, 2. a given amount of technical knowledge, and 3. full and efficient use of those resources. The slope of the curve indicates the amount of one product that must be given up to produce more of the other.
12. Investment- The purchase, construction, or development of resources, including physical assets, such as plants and machinery, and human assets, such as better education. Investments expand economy resources. The process of investment is sometimes called capital.
13. Entrepreneur- A person who introduces new products or improved technologies and decides which projects to undertake. A successful entrepreneur's actions will increase the value of resources and expand the size of the economic pie.
14. Law of Comparative Advantage - A principle that states that individuals, firms, regions, or nations can gain by specializing in the production of goods that they produce cheaply (at low opportunity costs ) and exchanging them for goods they cannot produce ( at a high opportunity cost).
15. Market Organization- A method of organization in which private parties makes their own plans and decisions with the guidance of unregulated market prices.
16. Capitalism- An economic system in which productive resources are owned privately and goods and resources are allocated through market prices.
17. Socialism- A system of economics organization in which 1. the ownership and control of the basic means of production. 2 resources allocation is determined by centralized planning rather than market forces.
18. Law demand- A principle that states there is an inverse relationship between the price of a good and the quantity of it buyers are willing to purchase. As the price of good increases, consumers will wish to purchase more of it.
19. Market- An abstract concept encompassing the forces of supply and demand, and the interaction of buyers and sellers with the potential for exchange to occur.