Economics Terminology Reference
Economics is a social science which is concerned with the production, distribution, and consumption of goods and services. It studies how individuals, businesses, governments, and nations make choices on allocating resources to satisfy their wants and needs, and how these choices determine prices and the level of output and income.
Microeconomics is the study of individual units in economics, such as firms and households. Macroeconomics is the study of the economy as a whole, focusing on things like inflation, unemployment, and gross domestic product.
Economic terminology can be confusing for some, so here we offer a reference list of some of the most common terms used in the study of economics.
Good – A good is a tangible object that can be bought and sold, such as a car or a house.
Service – A service is an intangible object that cannot be touched but provides a benefit, such as a massage or a haircut.
Demand – Demand is the amount of a good or service that consumers are willing and able to purchase at a particular price.
Supply – Supply is the amount of a good or service that producers are willing and able to provide at a particular price.
Price – The price is the amount of money that a consumer must pay to purchase a good or service.
Competition – Competition is the rivalry among businesses that sell the same good or service.
Monopoly – A monopoly is a market in which one firm sells a good or service with no competition.
Elasticity – Elasticity describes how sensitive the quantity demanded of a good or service is to a change in its price.
Income – Income is the money that people earn from working, investing, or government benefits.
Consumer – A consumer is an individual who buys goods and services to satisfy wants and needs.
Producer – A producer is an individual or organization that supplies goods and services to the market.
Revenue – Revenue is the total amount of money that a company receives from its sales.
Cost – Cost is the amount of money that a company spends to produce and distribute itsgoods and services.
Investment – Investment is the purchase of capital goods in order to produce more goods or services.
Profit – Profit is the difference between revenue and costs. It is the amount of money leftover after all costs and expenses are paid for.
Market – A market is a place where buyers and sellers come together to exchange goods and services.
Interest – Interest is the amount of money that is paid for the use of money lent out.
Budget – A budget is a plan that outlines how to spend money in order to achieve one’s objectives.
Taxation – Taxation is the practice of collecting taxes from individuals and businesses to fund government services and programs.
Trade – Trade is the exchange of goods and services between two or more countries.
Labor – Labor is work that humans do in exchange for wages or salaries.
Exchange Rate – An exchange rate is the rate at which one currency can be exchanged for another.
Inflation – Inflation is the persistent increase in prices of goods and services as measured by the consumer price index.
These are just some of the terms used in economics. It is important to understand them if you are studying economics, as they are used frequently in economic analysis and policy making. Additionally, understanding these terms will help you understand economic news and current events.
