Chapter 1 Definitions

Front 1

Economics

Back 1

The social science concerned with how individuals, institutions, and society make optimal choices under conditions of scarcity.

Front 2

Tradeoffs

Back 2

The sacrifice of some/all of one economic goal, good, or service to achieve another one.

Front 3

Opportunity Cost

Back 3

The amount of other products that must be forgone or sacrificed to produce a unit of a product.

Front 4

Utility

Back 4

Satisfaction a person gets from consuming a good or service.

Front 5

Marginal Analysis

Back 5

Comparison of marginal (extra/additional) benefits and marginal costs, usually for decision making.

Front 6

Economic Principle

Back 6

Statement about economic behaviour or the economy that enables prediction of the probable effects of certain actions.

Front 7

Other-Things-Equal Assumption

Back 7

The assumption that factors other than those being considered are held constant.

Front 8

Microeconomics

Back 8

Part of economics concerned with such individual units as industries, firms, and households.

Front 9

Macroeconomics

Back 9

The part of economics concerned with the economy as a whole.

Front 10

Aggregate (give example)

Back 10

A collection of specific economic units treated as if they were one unit (ex. unemployment rates)

Front 11

Positive Economics

Back 11

The analysis of facts to extablis cause-and-effect relationships.

Front 12

Normative Economics

Back 12

Part of economics involving value judgments about what the economy should be like.

Front 13

Economic Problem

Back 13

The need to make choices because society's material wants for goods and services are unlimited but the resources available to satisfy these wants are limited (scarce).

Front 14

Budget Line

Back 14

Schedule or curve that shows various combinations of two products a consumer can purchase with a specific money income.

Front 15

Economic Resources (also called?)

Back 15

The land, labour, capital, and entrepreneurial ability that are used in the production of goods and services. Also called Factors of Production (FOP)/Inputs.

Front 16

Land

Back 16

Natural resources used to produce G&S's.

Front 17

Labour

Back 17

The physical and mental talents of individuals used in producing G&S's.

Front 18

Capital

Back 18

Human-made resources (buildings, machinery, and equipment) used to produce G&S's.

Front 19

Entrepreneurial Ability

Back 19

Human talents that combine the other resources to produce a product, make non-routine decisions, innovte and bear risks.

Front 20

Consumer Goods

Back 20

Products and services that satisfy human wants directly.

Front 21

Capital Goods

Back 21

Goods that do not directly satisfy human wants.

Front 22

Production Possibilities Curve

Back 22

Curve showing the different combinations of goods or services that can be produced in a full-employment, full-production economy where the available supplies of resources and technology are fixed.

Front 23

Law of Increasing OC

Back 23

As the production of a good increases, the opportunity cost of producing an additional unit rises.

Front 24

Economic Growth

Back 24

Outward shift in the PPB that results from an increase in factor supplies or quality or an improvement in technology

Front 25

Direct Relationship (also called?)

Back 25

Two variables change in the same direction (increase in income is increase in consumption). Also called a positive relationship.

Front 26

Inverse Relationship (also called?)

Back 26

Two variables change in opposite direction (Ticket prices decrease, attendance increases). Also called a negative relationship.

Front 27

Independent Variable

Back 27

Cause/Source; the variable that changes first.

Front 28

Dependent Variable

Back 28

Effect/Outcome; the variable tha changes because of the change in the independent variable.