Basic Concepts in Economics

Scarcity: The fundamental economic problem of unlimited wants and needs, but limited resources.
Opportunity Cost: The value of the next best alternative that is given up when a choice is made.
Economic Systems: Types:
- Command Economy: Government makes decisions on production and distribution of goods and services.
- Market Economy: Individuals and businesses make decisions on production and distribution of goods and services.
- Mixed Economy: Combination of command and market economies.

Supply and Demand: The price mechanism that determines the prices of goods and services in a market economy.
Law of Supply: As the price of a good increases, the quantity supplied also increases.
Law of Demand: As the price of a good decreases, the quantity demanded increases.
Market Equilibrium: The point at which the supply and demand curves intersect, where the quantity supplied equals the quantity demanded.

Gross Domestic Product (GDP): The total value of all final goods and services produced within a country's borders.
Inflation: A sustained increase in the general price level of goods and services in an economy over time.
Unemployment: The number of people able and willing to work, but unable to find employment.
Economic Growth: An increase in the production of goods and services in an economy over time.

Classical Economics: Assumes people act in their own self-interest, and markets are efficient.
Keynesian Economics: Emphasizes government intervention to stabilize the economy during times of economic downturn.
Monetarism: Focuses on the role of the money supply in determining economic activity.

Absolute Advantage: A country has an absolute advantage if it can produce a good or service at a lower opportunity cost than another country.
Comparative Advantage: A country has a comparative advantage if it can produce a good or service at a lower opportunity cost relative to another good or service.
Gains from Trade: The benefits of trade, including increased economic efficiency and variety of goods and services.

The fundamental economic problem arises from unlimited wants and needs, but limited resources, leading to scarcity.
Opportunity cost is the value of the next best alternative that is given up when a choice is made.
Economic systems include command, market, and mixed economies, with varying levels of government and individual decision-making.

Supply and demand determine prices in a market economy, where the price mechanism determines the prices of goods and services.
The law of supply states that as the price of a good increases, the quantity supplied also increases.
The law of demand states that as the price of a good decreases, the quantity demanded increases.
Market equilibrium occurs when the supply and demand curves intersect, where the quantity supplied equals the quantity demanded.

Gross Domestic Product (GDP) is the total value of all final goods and services produced within a country's borders.
Inflation is a sustained increase in the general price level of goods and services in an economy over time.
Unemployment is the number of people able and willing to work, but unable to find employment.
Economic growth is an increase in the production of goods and services in an economy over time.

Classical economics assumes people act in their own self-interest, and markets are efficient.
Keynesian economics emphasizes government intervention to stabilize the economy during times of economic downturn.
Monetarism focuses on the role of the money supply in determining economic activity.

Absolute advantage occurs when a country can produce a good or service at a lower opportunity cost than another country.
Comparative advantage occurs when a country can produce a good or service at a lower opportunity cost relative to another good or service.
Gains from trade include increased economic efficiency and variety of goods and services.