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Economic Concepts & Theories

132 cards · 🇺🇸 English

What economics is and the core theories behind it.

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Economics

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  1. 1Economics
    A social science studying the production, distribution, and consumption of goods and services
  2. 2Microeconomics
    Individual agents, markets, their interactions, and outcomes at the smallest scale
  3. 3Macroeconomics
    Economies as systems: production, consumption, savings, investment, and aggregate phenomena
  4. 4Scarcity
    Limited resources relative to unlimited wants and needs
  5. 5Lionel Robbins' definition of economics
    The science studying human behavior as a relationship between ends and scarce means with alternative uses
  6. 6Factors of production
    Land, labor, capital, and enterprise (entrepreneurship)
  7. 7Positive economics
    Economics describing 'what is' (objective, factual)
  8. 8Normative economics
    Economics advocating 'what ought to be' (subjective, value-based)
  9. 9Rational choice theory
    The assumption that individuals make decisions by maximizing utility given constraints
  10. 10Behavioral economics
    Economics incorporating psychological insights into economic decision-making
  11. 11Economy' originally
    From Greek oikonomia: 'the way to run a household' (oikos = house, nomos = law)
  12. 12Earlier term for economics
    Political economy (used until the late 19th century)
  13. 13Three factors of production identified by Adam Smith
    Land, labor, and capital
  14. 14Invisible hand
    Smith's metaphor: individuals pursuing self-interest unintentionally promote societal welfare
  15. 15Division of labor
    Breaking down production into specialized tasks to increase efficiency
  16. 16Comparative advantage
    A country should specialize in goods it can produce at lower relative cost
  17. 17Labor theory of value
    The value of a good is determined by the labor required to produce it
  18. 18Mercantilism
    16th-18th century doctrine: a nation's wealth depends on accumulating gold and silver through trade surpluses
  19. 19What did the Physiocrats believe?
    Only agricultural production generates surplus; agriculture is the basis of all wealth
  20. 20Laissez-faire
    An economic policy calling for minimal government intervention
  21. 21Malthus' theory
    Population grows geometrically while food production grows arithmetically, leading to low wages
  22. 22Diminishing returns
    Adding more of one input (e.g., labor) to fixed inputs yields progressively smaller output increases
  23. 23Marxian economics
    Economics based on Karl Marx's work, focusing on labor exploitation and surplus value
  24. 24Das Kapital
    Karl Marx's major work (1867) on political economy and capitalism
  25. 25Surplus value in Marxian economics
    The difference between what workers produce and what they are paid
  26. 26Supply
    The quantity of a good or service producers are willing to sell at various prices
  27. 27Demand
    The quantity of a good or service consumers are willing to buy at various prices
  28. 28Law of demand
    As price increases, quantity demanded decreases (ceteris paribus)
  29. 29Law of supply
    As price increases, quantity supplied increases (ceteris paribus)
  30. 30Equilibrium
    The point where supply equals demand, determining market price and quantity

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