Economically, the problem of infinite human needs and wants in a world of finite resources.
The basic relationship between scarcity and choice. The sacrifice incurred by choosing one option over an alternative that may be equally desired. All choices have an opportunity cost.
John Maynard Kenyes
1883-1946. British economist who is considered the father of modern macroeconomics. Advocate of interventionist policy of government, by which the government would use fiscal and monetary measures to mitigate adverse effects of economic recessions, depressions, and booms.
1723-1790. Pioneering economic theorist. Father of economics. Explained how rational self-interest and competition, operating in a social framework which ultimately depends on adherence to moral obligations, can lead to economic well-being and prosperity.
System in which resources are allocated by inheritance, which has a strong social network and is based on primitive methods and tools. Found in underdeveloped regions of Soth America, Asia, and Africa.
System in which the state controls all aspects of the economy and makes all decisions about wealth distribution and the use of the economy. Found in communist states.
System in which the production and distribution of goods and services take place through the mechanism of free markets guided by a free price system. There are no governents in which a true market economy exists.
Economic model that describes a hypothetical market form in which neither the producer or consumer has the market power to influence prices. Defines a market equilibrium in which all resources are allocated and used efficiently, and collective social welfare is maximized.
Common market from where there are many producers and consumers, consumers perceive that there are non-price differences in the products, few barriers to entry and exit, and producers have a degree of control over price. Markets for restaurants, cereal, shoes, clothing, and services in large cities.
Market form in which a market is dominated by a large number of sellers. When oligopolists in the same market collude and agree to raise prices and restrict production, a cartel forms.
Market form that exists when a specific individual or enterprise has sufficient control over a particular product or service to significantly determine the terms on which other individuals shall have access to it.
Occurs when an individual or entity can produce a good using fewer resources than another country or entity.
Theory that shows that even if a country or entity has no absolute advantage in producing any good, it can still benefit by exporting the products by which it has the lowest opportunity cost of production.