Master essential IBDP Economics definitions, diagrammatic analysis, and evaluation points for Microeconomics, Macroeconomics, and the Global Economy. Aligned with the current syllabus.
20 cards
Front
**Scarcity**
Back
The fundamental economic problem where human wants are infinite but resources (land, labor, capital, entrepreneurship) are limited. It necessitates choice, leading to **opportunity costs** at every level of decision-making, from individual consumers to governments.
Front
**Opportunity Cost**
Back
The **next best alternative foregone** when an economic decision is made. It is not the sum of all rejected alternatives, but strictly the value of the single best option not chosen. This concept underpins all rational economic behavior and Production Possibility Curves (PPC).
Front
**Allocative Efficiency**
Back
Occurs when resources are distributed to maximize social welfare. It happens where **Price = Marginal Cost (P=MC)** or **Marginal Benefit = Marginal Cost (MB=MC)**. At this point, the value consumers place on the last unit consumed equals the cost of resources used to produce it.
Front
**Price Elasticity of Demand (PED)**
Back
A measure of the **responsiveness** of quantity demanded to a change in price. **Formula:** PED = (% Change in Quantity Demanded) / (% Change in Price). *Note:* PED is usually negative due to the law of demand, but is treated as a positive absolute value. PED > 1 is elastic; PED < 1 is inelastic.
Front
**Determinants of PED (YED)**
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The main determinant of YED is the nature of the good: necessities have low YED, luxuries have high positive YED, and inferior goods have negative YED. The more essential the good is, the smaller the change in quantity demanded when income changes.
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