Key Concepts

The using up of goods and services by people to satisfy their wants and needs. Along with production and exchange, it is one of the basic economic a …

The activity of creating goods and services by combining and using the economy's scarce resources. It is one of the three basic economic activities, alongsi …

The act of giving up one good or service in order to obtain another. Because no individual owns everything she needs, people trade part of what they produce for the many othe …

The condition in which resources are limited relative to people's unlimited wants. Scarcity forces every individual and every society to make choices, since having more of one good …

The different combinations of goods and services that an economy can produce when its given resources and technology are fully and efficiently used. The complete collection of such combinations …

The amount of one good that must be given up in order to produce a little more of another good. Because scarce resources have alternative uses, every choice carries this cost; …

In economics, an institution — a set of arrangements — that organises the free interaction of buyers and sellers who exchange goods and services. It is not a physical place: buyers and sellers may transact by telephone, o …

An economic system in which all economic activities are organised through the market, and the basic problems of what, how, and for whom to produce are solved by the free interaction of individuals …

An economic system in which the government or a central authority plans all the important activities and makes the major decisions about production, exchange, and distribution, aiming at an allocation thought t …

An economy in which some important decisions are taken by the government while most economic activities are conducted through the market. In reality all economies are mixed; they differ only in t …

The study of how the different economic mechanisms actually function — describing what is, was, or will be — without judging whether the …

The study of whether the economic mechanisms and their outcomes are desirable — dealing with what ought to be — and therefore involving value judgments abo …

The branch of economics that studies the behaviour of individual economic agents in the markets for particular goods and services, and how the prices and quantities of those goods are det …

The branch of economics that studies the economy as a whole through aggregate measures such as total output, total employment, and the aggregate price level, and how these are …

The collection of ALL the possible combinations of goods and services that an economy can produce with its given resources and its given stock of technology. It is distinct from the production possibility frontier, which is only the outer boundary of this set — the combinati …