Economics flashcards, generated for you.

The fundamental problem that resources (time, money, materials) are limited while human wants are unlimited, forcing choices about production and consumption.

The value of the next-best alternative foregone. Example: choosing to attend college means forgoing 4 years of salary from a job—that salary is the opportunity cost.

As the price of a good increases, the quantity supplied increases (all else equal). Example: higher oil prices incentivize more drilling.

As the price of a good increases, the quantity demanded decreases (all else equal). Example: when coffee prices rise, fewer people buy coffee.

The price and quantity where quantity supplied equals quantity demanded, with no shortage or surplus. Example: concert tickets sell out at $100 because supply perfectly matches demand.

A measure of how responsive quantity demanded is to price changes. Formula: % change in quantity / % change in price. Elastic demand (>1) = price-sensitive; inelastic (<1) = price-insensitive. Example: insulin is inelastic; luxury goods are elastic.

A person/country can produce a good at a lower opportunity cost than another, even if not the most efficient overall. Example: Bob grows 10 tomatoes or 5 peppers/day; Ann grows 20 tomatoes or 30 peppers/day. Ann has comparative advantage in peppers (lower opportunity cost: 2/3 tomato vs Bob's 2 tomatoes).

Gross Domestic Product = total monetary value of final goods/services produced in a country in a period. Calculated by: C (consumer spending) + I (investment) + G (government) + (X−M) (exports minus imports).

Sustained increase in general price levels over time, reducing purchasing power. Consequence: if your wage doesn't rise with inflation, you can afford less (e.g., $50k salary in 2010 ≠ $50k in 2024).

Microeconomics studies individual actors (firms, consumers, markets); macroeconomics studies economy-wide phenomena (GDP, inflation, unemployment, interest rates). Example: micro = why Netflix raised prices; macro = why inflation affected all streaming services.