Aggregate supply represents total goods and services produced at specific prices. It is measured over a year and is the economy's gross domestic product. Aggregate supply is typically positively related to price levels
A substitute is a product that can be used in place of another. Substitutes provide consumers with more choices in the marketplace. They create competition and lower prices in the market
Microeconomics studies individual and business decisions, focusing on supply and demand. Macroeconomics analyzes country and government decisions, taking a top-down approach. Both fields are interdependent and complement each other
Latin phrase meaning "other things equal" or "all other things held constant". Used to isolate effects of one variable while ignoring others. Essential in scientific inquiry to eliminate interfering factors
Neoclassical economics views production and consumption through supply and demand model. Value determined by utility maximization by individuals and profit maximization by firms. Theory emphasizes rational choice and independent decision-making
Market economy relies on supply and demand to guide investment and production decisions. Factor markets play dominant role in capital and production allocation. Government intervention varies from minimal regulation to active social welfare promotion