《a-level_economics_definition_经济定义》.pdf

Important Terms Definitions | H2 Economics IMPORTANT TERMS DEFINITIONS [ECONOMICS] Microeconomics 1. Introduction to Economics Scarcity Situation where limited resources available unable to satisfy unlimited human wants Opportunity Cost (OC) Cost of any activity measured in terms of next best alternative forgone Production Possibility Curve Shows all different maximum attainable combinations of goods (PPC) services produced when all available resources are used efficiently at given state of technology Law of Increasing Opportunity As more of a good is produced, more of another good has to be Cost sacrificed in production Comparative Advantage When one can perform an activity at a lower opportunity cost than anyone else Law of Comparative Advantage Trade can benefit countries if they specialize in goods in which they have a comparative advantage 2. Demand Supply Law of Demand Inverse relationship exists between price of good and quantity demanded of good, ceteris paribus Law of Supply Direct relationship exists between price of good and quantity supplied of good, ceteris paribus Price Elasticity of Demand (PED) Degree of responsiveness of quantity demanded of good to a change in its own pr