ECON 251 FINAL STUDY GUIDE
1. Scarcity: Limited quantities of resources to meet unlimited wants
2. incentive: rewards and penalties that motivate behavior
3. marginalism: people make decisions "at the margin" on or at the edge and having to do with the ettect of the
last units
4. institutions: social rules can align with individual interests with other interests "rules of the game"
5. Trade: voluntary exchanges are mutually beneficial (makes people better ott)
6. growth: wealth and economic growth changes lives institutions shape economic growth
7. business cycle: booms and busts cant be predicted or prevented but they can be moderated
8. inflation: printing more money makes prices go up
9. economics: the study of how to get the most out of life
10. reservation price: to be willing to sell a good
11. microeconomics: branch of economics studying choices and interactions of individuals and firms under
scarcity
12. good: anything of which an agent prefers to get more rather than less. more is preferred to less
13. Efficiency: using resources in such a way as to maximize the production of goods and services
14. opportunity cost: value of the next best alternative option to choose
15. Production Possibilities Frontier (PPF): a curve showing the maximum attainable combinations of
two products that may be produced with available resources and current technology
16. demand: a relationship between the price and quantity demanded of a certain good or service
17. law of demand: all else held equal when price decreases quantity demanded increases
18. price ceiling: A legal maximum on the price at which a good can be sold
19. price floor: A legal minimum on the price at which a good can be sold
20. stock: share gives part ownership of a company
1/3
1. Scarcity: Limited quantities of resources to meet unlimited wants
2. incentive: rewards and penalties that motivate behavior
3. marginalism: people make decisions "at the margin" on or at the edge and having to do with the ettect of the
last units
4. institutions: social rules can align with individual interests with other interests "rules of the game"
5. Trade: voluntary exchanges are mutually beneficial (makes people better ott)
6. growth: wealth and economic growth changes lives institutions shape economic growth
7. business cycle: booms and busts cant be predicted or prevented but they can be moderated
8. inflation: printing more money makes prices go up
9. economics: the study of how to get the most out of life
10. reservation price: to be willing to sell a good
11. microeconomics: branch of economics studying choices and interactions of individuals and firms under
scarcity
12. good: anything of which an agent prefers to get more rather than less. more is preferred to less
13. Efficiency: using resources in such a way as to maximize the production of goods and services
14. opportunity cost: value of the next best alternative option to choose
15. Production Possibilities Frontier (PPF): a curve showing the maximum attainable combinations of
two products that may be produced with available resources and current technology
16. demand: a relationship between the price and quantity demanded of a certain good or service
17. law of demand: all else held equal when price decreases quantity demanded increases
18. price ceiling: A legal maximum on the price at which a good can be sold
19. price floor: A legal minimum on the price at which a good can be sold
20. stock: share gives part ownership of a company
1/3
