Economics Basic Concepts – Quiz Set 1

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Scarcity means resources are limited relative to wants.

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Opportunity cost means the value of the next best alternative forgone.

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Trade-off means giving up one thing to get another.

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Ceteris paribus means holding other factors constant.

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Productivity means output per unit of input.

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Specialization means focusing on a narrow set of tasks.

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Division of labor means splitting production into specialized tasks.

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Marginal cost means the additional cost of one more unit.

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Marginal benefit means the additional benefit of one more unit.

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Diminishing marginal utility means each extra unit gives less added satisfaction.

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Elastic demand means quantity responds more than price.

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Inelastic demand means quantity responds less than price.

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Equilibrium means quantity demanded equals quantity supplied.

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Shortage means quantity demanded exceeds quantity supplied.

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Surplus means quantity supplied exceeds quantity demanded.

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Inflation means a sustained rise in the general price level.

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Deflation means a sustained fall in the general price level.

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Real GDP means gdp adjusted for price changes.

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Nominal GDP means gdp measured at current prices.

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Economic growth means an increase in real gdp over time.

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Economic development means improvements in living standards and quality of life.

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Fiscal policy means government spending and taxation.

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Monetary policy means control of money supply and interest rates.

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Public good means non-excludable and non-rival.

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Negative externality means a third party bears a cost.

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Positive externality means a third party receives a benefit.

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Comparative advantage means lower opportunity cost.

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Tariff means a tax on imported goods.

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Quota means a limit on import quantity.

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Medium of exchange means money used to buy and sell.