IB Economics 1.1.1 Economics as a Social Science Key Definitions

The dynamic nature of economic activity, where prices, employment, output, and policies evolve over time in response to internal and external influences.

The act of selecting among alternatives because of the scarcity of resources.

The level of prosperity, economic satisfaction, and standard of living experienced by members of an economy.

The study of choices leading to the best possible use of scarce resources in order to best satisfy unlimited human needs and wants.

Using scarce resources in the best possible way to avoid welfare loss.

The condition of being fair and just.

The concept that economic decision-makers rely on and interact with one another, because no one can be entirely self-sufficient.

Typically involving government action, it occurs when the government interacts with the workings of markets.

The branch of economics that analyzes the economy as a whole by using aggregates.

The branch of economics that studies the behaviour of consumers and firms in making decision regarding the allocation of resources.

The idea that available resources (land, labour, capital, entrepreneurship) are limited and unable to satisfy unlimited human needs and wants.

Any academic field that examines human society and social relationships, focusing on uncovering general principles that explain how societies operate and are structured.

Preserving the capacity of the environment and the economy to continue to produce and satisfy the needs and wants of future generations.

The reduction in social surplus that occurs when marginal social benefits (MSB) are not equal to marginal social costs (MSC), typically as a result of market failure.