Most Important Economic Key Concepts

14 Apr

Concept 1 (“Tradeoff”): The sacrifice of some or all of economic goal,good, or service to achieve some other goal,good, or service.

Concept 2(“Opportunity Cost“):The cost of the choice(s) you give up.

Concept 3(“Margin“): It means choosing a little bit “more” or a little bit “less” of something.

Concept 4(“Incentive“):Something that influence you to make a decision.

Concept 5(“Specialization and Trade“): Specialization and trade will improve the well-being of participants.

Concept 6(“Role of Governments“): Governments can improve the coordinating function of markets.

Concept 7(“Production and standard of living“):The standard of living of an average person in a particular country is dependent on its production of goods and services. A rise in standard of living requires a rise in output of goods and services.

Concept 8(“Money and Inflation“):If the monetary authorities of a country annually print money in excess of the growth of output of goods and services it will eventually lead to inflation.

Concept 9(“Inflation-Unemployment Tradeoff“):In short run,societies faces a short-run tradeoff between inflation and it’s level of unemployment.

Concept 10(“Marginal Analysis“):Comparison between marginal benefits and marginal costs.


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