Economic Concepts Overview

Economics: The study of how individuals and societies allocate scarce resources to satisfy unlimited wants.
Microeconomics: Focus on individual consumers and businesses.
Macroeconomics: Focus on the economy as a whole, including inflation, unemployment, and economic growth.

Scarcity: Limited availability of resources versus unlimited wants.
Opportunity Cost: The cost of forgoing the next best alternative when making a decision.
Supply and Demand:
- Demand: Consumer willingness and ability to purchase goods/services.
- Supply: Producer willingness and ability to sell goods/services.
- Equilibrium Price: The price at which quantity supplied equals quantity demanded.

Traditional Economy: Relies on customs, history, and time-honored beliefs.
Command Economy: Central authority makes decisions regarding resources and products (e.g., socialism, communism).
Market Economy: Decisions made through market interactions (e.g., capitalism).
Mixed Economy: Combines elements of both market and command economies.

Gross Domestic Product (GDP): Total value of all final goods and services produced in a country within a specific time.
Inflation: The rate at which the general price level of goods and services rises, eroding purchasing power.
Unemployment Rate: The percentage of the labor force that is jobless and actively seeking employment.

Classical Economics: Advocates for free markets and minimal government intervention.
Keynesian Economics: Emphasizes total spending in the economy and its effects on output and inflation.
Supply-Side Economics: Focuses on boosting economic growth by increasing supply (production).

Perfect Competition: Many firms, identical products, free entry/exit.
Monopolistic Competition: Many firms, differentiated products, some market power.
Oligopoly: Few firms, interdependent pricing, potential for collusion.
Monopoly: Single firm dominates the market, significant pricing power.

Fiscal Policy: Government spending and tax policies used to influence economic conditions.
Monetary Policy: Central bank actions to control the money supply and interest rates.

Comparative Advantage: The ability of a country to produce a particular good at a lower opportunity cost than another country.
Trade Balance: Difference between a country's exports and imports.
Exchange Rates: The value of one currency for the purpose of conversion to another.

The Circular Flow Model: Illustrates the flow of goods, services, and money in an economy.
Production Possibility Frontier (PPF): Shows the maximum feasible amounts of two goods that a country can produce with its available resources.

Keep these key points handy for a solid understanding of economic principles and structures.

Economics: The study of how individuals and societies allocate scarce resources to satisfy unlimited wants.
Scarcity: The fundamental economic problem that arises because resources are finite, while human wants are infinite.
Opportunity Cost: The value of the next best alternative forgone when making a choice.

Microeconomics: Focuses on individual units like households, firms, and markets.
Macroeconomics: Examines the overall economy, including issues like inflation, unemployment, and economic growth.

Traditional Economy: Decisions are based on customs, traditions, and history (e.g., subsistence farming).
Command Economy: Central authority makes most economic decisions (e.g., socialist and communist systems).
Market Economy: Decisions are made by individuals interacting in free markets (e.g., capitalism).
Mixed Economy: Combines elements of market and command economies (most economies today).

Gross Domestic Product (GDP): The total market value of all final goods and services produced within a country's borders in a specific time period.
Inflation: A sustained increase in the general price level of goods and services, eroding purchasing power.
Unemployment Rate: The percentage of the labor force that is jobless but actively seeking employment.

Classical Economics: Emphasizes free markets and limited government intervention, advocating for the "invisible hand" of competition.
Keynesian Economics: Focuses on government intervention through fiscal and monetary policies to regulate the business cycle.
Supply-Side Economics: Emphasizes policies that stimulate production and economic growth by reducing taxes and regulations.
The Circular Flow Model: Illustrates the flow of goods, services, and money between households and firms.
The Production Possibility Frontier (PPF): A model that shows the maximum combinations of two goods that an economy can produce with its available resources, illustrating the concept of opportunity cost.

Perfect Competition: Characterized by many firms, identical products, free entry and exit, and no market power.
Monopolistic Competition: Many firms, differentiated products (branding, advertising), some market power, and easy entry and exit.
Oligopoly: Few firms, interdependent pricing decisions, potential for collusion and limited entry and exit.
Monopoly: A single firm dominates the market, with significant pricing power and barriers to entry.

Fiscal Policy: Government actions regarding spending levels and tax rates to influence economic activity.
Monetary Policy: Central bank actions to manipulate the money supply and interest rates.

Comparative Advantage: A country's ability to produce a good at a lower opportunity cost than other countries, leading to specialization and economic growth through trade.
Trade Balance: The difference between a country's exports and imports, indicating a surplus if exports exceed imports, and a deficit if imports exceed exports.
Exchange Rates: The value of one currency in relation to another, influencing the price of imports and exports.