Economics: is the social science that studies how individuals, businesses, governments, and societies

allocate their scarce resources to satisfy their unlimited wants and needs.

Basic Needs: are essential goods and services required for human survival and well-being, such as food,
shelter, clothing, and healthcare.

Luxury Goods: are products or services that are not essential for survival but are highly desirable due to
their quality, prestige, or exclusivity. They are often associated with higher prices.

Economic Resources: also known as factors of production, are the inputs used in the production of
goods and services. They are typically categorized into four types: land, labor, capital, and
entrepreneurship.

Land: refers to all natural resources used in production, including land itself, minerals, water, and other
raw materials.

Labor: represents the human effort, skills, and work hours used in the production process.

Capital: refers to the physical and human-made resources used in production, such as machinery,
factories, tools, and human capital (knowledge and skills).

Entrepreneur: is an individual who takes the initiative to combine land, labor, and capital to create and
manage a business venture, taking on financial risks in the hope of making a profit.

Theory: is a systematic explanation of observed phenomena or economic relationships based on a set of

principles and assumptions.

Hypothesis: is a testable statement or proposition used to make predictions about economic behavior
or outcomes. It is often tested through empirical research.

Variable: is a factor or quantity that can change in value, such as price, quantity, income, or any other
economic measure.

Microeconomics: is the branch of economics that focuses on the study of individual economic units,
such as households, firms, and markets, and their decision-making processes.

Normative Economics: deals with value judgments and policy recommendations. It involves assessing
what should be done to achieve certain economic goals.

Positive Economics: is concerned with objective analysis and the description of economic phenomena as
they are, without making normative judgments. It seeks to understand and explain economic facts.

Empirical Validation: refers to the process of testing economic theories or hypotheses using real-world
data and observations to determine their accuracy and applicability.

Economic System: is a set of institutions, rules, and mechanisms that determine how resources are
allocated, goods and services are produced, and income is distributed in a society.

Free Enterprise System: also known as capitalism, is an economic system in which private individuals or
firms own and control the means of production, and economic activities are driven by competition and
market forces.

Right to Private Property: is a fundamental concept in economics that allows individuals and businesses
to own, use, and dispose of property and assets as they see fit, within the boundaries of the law.

Market: is a mechanism or place where buyers and sellers come together to exchange goods and
services. It can be a physical location or a virtual platform.

Wants: are human desires or preferences for goods and services. They are unlimited and diverse, but
they must be satisfied with limited resources.

Function: represents a mathematical relationship between two or more economic variables. It describes
how one variable depends on or is related to another. Functions are often used to model economic
behavior and relationships.

Demand: refers to the quantity of a good or service that consumers are willing and able to purchase at
various price levels during a specific period.
Supply: is the quantity of a good or service that producers are willing and able to offer for sale at
different price levels during a specific period.

Market: is a mechanism that brings together buyers and sellers to exchange goods and services. It can
be physical or virtual.

Price Elasticity of Demand: measures the responsiveness of the quantity demanded of a good to
changes in its price. If demand is elastic, a small change in price leads to a relatively large change in
quantity demanded, and if it’s inelastic, a change in price leads to a relatively shall change in quantity
demanded.

Utility: refers to the satisfaction or happiness that consumers derive from consuming a particular good
or service.

Marginal Utility: is the additional satisfaction or benefit a consumer gains from consuming one more
unit of a good or service.

Opportunity Cost: is the value of the next best alternative that must be forgone when a decision is made
to allocate resources (money, time, etc.) to one option rather than another.

Perfect Competition: is a market structure in which there are many small firms producing homogeneous
(identical) goods or services, with no barriers to entry or exit, and firms are price takers (they have no
control over the market price).

Monopoly: is a market structure in which there is a single seller or producer of a unique product or
service, giving them significant control over price, and there are high barriers to entry for other firms.

Monopolistic Competition: is a market structure characterized by many firms producing differentiated

products, allowing them some degree of control over price due to product differentiation.

Oligopoly: is a market structure in which a small number of large firms dominate the market and
compete with each other, often by strategic actions that can affect prices and output.

Economies of Scale: occur when the average cost of producing a good or service decreases as the level
of production increases.

Consumer Surplus: represents the difference between what consumers are willing to pay for a good or
service (their willingness to pay) and what they actually pay for it.

Producer Surplus: is the difference between the price at which producers are willing to sell a good or
service and the price they actually receive.

Price Floor: is a government-imposed minimum price set above the equilibrium price in a market to
protect producers and prevent prices from falling below a certain level.

Price Ceiling: is a government-imposed maximum price set below the equilibrium price in a market to
protect consumers and prevent prices from rising above a certain level.

Economics: is the social science that studies how individuals, businesses, governments, and societies
allocate their scarce resources to satisfy their unlimited wants and needs.

Macroeconomics: is a branch of economics that focuses on the study of the economy as a whole, rather
than individual economic units or specific markets. It deals with aggregate economic phenomena, such
as total output, employment, inflation, national income, and the overall performance of a country’s
economy. Macroeconomics seeks to understand and analyze the broader economic trends and
relationships that affect an entire nation or region.

Gross Domestic Product (GDP): study the total value of goods and services produced within a country’s
borders (GDP) to measure the overall economic activity and growth.

Unemployment: examines the levels of employment and unemployment in the economy, as well as the
factors influencing them.

Inflation: The study of price levels and inflation is a central concern in macroeconomics. It investigates
the causes and consequences of changes in the general price level.
Economic Growth: Macroeconomists analyze the factors that contribute to long-term economic growth
and the policies that can promote or hinder it.

Fiscal Policy: This area focuses on the use of government spending and taxation to influence economic
activity and achieve economic goals such as stabilizing the economy and promoting growth.

Monetary Policy: Macroeconomics explores the role of central banks in controlling the money supply
and interest rates to achieve economic objectives like price stability and full employment.

International Trade and Finance: Macroeconomists examine the impact of international trade, exchange
rates, and balance of payments on a nation’s economy.

Income Distribution: The distribution of income and wealth within a society is an important
macroeconomic issue, including topics related to poverty, inequality, and social welfare.

Business Cycles: Macroeconomics investigates the causes and characteristics of economic fluctuations,
including recessions and expansions.

Economic Indicators: Various economic indicators, such as consumer confidence, business sentiment,
and leading economic indicators, are monitored to assess the overall health of an economy.

Government Budgets: The analysis of government revenue and expenditure, including budget deficits
and surpluses, falls within the purview of macroeconomics.

Macroeconomic Models: Macroeconomists develop models to help explain and predict economic
phenomena, such as the aggregate demand and aggregate supply model.

Economic Policies: Macroeconomics informs the formulation and evaluation of economic policies at the
national level, including policies aimed at stabilizing the economy, achieving full employment, and
managing inflation.

Microeconomics: is a branch of economics that focuses on the study of individual economic units, such
as households, firms, and markets. It examines how these economic agents make decisions, interact,
and allocate their limited resources to satisfy their wants and needs in a world characterized by scarcity.
Microeconomics delves into the details of specific economic transactions and behaviors at the micro-
level.

Demand and Supply: Microeconomics analyzes the behavior of consumers and producers in markets. It
examines how changes in the price of goods and services affect the quantity demanded and supplied.

Consumer Behavior: This area explores how individuals make choices about what to consume, taking
into account their preferences, budgets, and utility maximization.

Producer Behavior: Microeconomics investigates how firms decide what and how much to produce,
considering factors such as costs, production techniques, and profit maximization.

Market Structures: including perfect competition, monopoly, monopolistic competition, and oligopoly,
are examined in terms of their characteristics and implications for pricing and competition.

Price Elasticity: Microeconomics measures the responsiveness of quantity demanded or supplied to

changes in price, known as price elasticity of demand and price elasticity of supply.

Consumer Surplus and Producer Surplus: These concepts measure the economic welfare or benefit that
consumers and producers receive from participating in a market.

Production Costs: Microeconomics studies the various costs incurred by firms when producing goods
and services, including fixed costs, variable costs, and marginal costs.

Market Failures: Microeconomics investigates situations where markets may fail to allocate resources
efficiently, such as in the presence of externalities, public goods, and imperfect information.

Income Distribution: It explores how resources and income are distributed among individuals and
households, addressing issues of inequality and poverty.

Welfare Economics: This field assesses the economic well-being of society and examines policies and
market outcomes in terms of their impact on social welfare.

Consumer Choice Theory: Microeconomics employs utility theory to explain how consumers make
choices to maximize their satisfaction.
Production and Cost Functions: Microeconomics uses mathematical models to represent production and
cost relationships in firms.

Market Interventions: Microeconomics examines the effects of government policies, regulations, and
taxes on markets and individual behavior.

Labor Economics: This subfield focuses on labor markets, including issues related to wages,
employment, labor supply, and human capital.