Economics- Chapter 1 & 2

Front 1

The social science dealing with the use of scarce resources to obtain the maximum satisfaction of society's virtually unlimited economic wants.

Back 1

Economics

Front 2

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

Back 2

Ceteris Paribus Assumption

Front 3

The part of economics concerned with the economy as a whole; with such major aggregates as the household, business, and government sectors; and with measures of the total economy.

Back 3

Macroeconomics

Front 4

The part of economics concerned with such individual units as industries, firms, and households and with individual markets, specific goods and services, and product and resource prices.

Back 4

Microeconomics

Front 5

(1) The use of all available resources to produce want-satisfying goods and services; (2) the situation in which the unemployment rate is equal to the full-employment unemployment rate and there is frictional and structural but no cyclical unemployment (and the real GDP of the economy equals its potential output).

Back 5

Full Employment

Front 6

The comparison of marginal ("extra" or "additional") benefits and marginal costs, usually for decision making.

Back 6

Marginal Analysis

Front 7

An economic system in which property resources are privately owned and markets and prices are used to direct and coordinate economic activities.

Back 7

Capitalism

Front 8

The analysis of facts or data to establish scientific generalizations about economic behavior.

Back 8

Positive Economics

Front 9

The part of economics involving value judgments about what the economy should be like; focused on which economic goals and policies should be implemented; policy economics.

Back 9

Normative Economics

Front 10

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

Back 10

Economizing Problem

Front 11

The limited quantities of land, capital, labor, and entrepreneurial ability that are never sufficient to satisfy people's virtually unlimited economic wants.

Back 11

Scarce Resources

Front 12

Economic resources: land, capital, labor, and entrepreneurial ability.

Back 12

Factors of Production

Front 13

Natural Resources ("free gifts of nature") used to produce goods and services.

Back 13

Land

Front 14

Human-made resources (buildings, machinery, and equipment) used to produce goods and services; goods that do not directly satisfy human wants; also called capital goods.

Back 14

Capital

Front 15

People's physical and mental talents and efforts that are used to help produce goods and services.

Back 15

Labor

Front 16

The human resource that combines the other resources to produce a product, makes nonroutine decisions, innovates, and bears risks.

Back 16

Entrepreneurial Ability

Front 17

The apportionment of resources among firms and industries to obtain the production of the products most wanted by society (consumers); the output of each product at which its marginal cost and price or marginal benefit are equal.

Back 17

Allocative Efficiency

Front 18

The production of a good in the least costly way; occurs when production takes place at the output at which average cost is a minimum.

Back 18

Productive Efficiency

Front 19

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

Back 19

Opportunity Cost

Front 20

The principle that as the production of a good increases, the opportunity cost of producing an additional unit rises.

Back 20

Law of Increasing Opportunity Costs

Front 21

A particular set of institutional arrangements and a coordinating mechanism for solving the economizing problem; a method of organizing an economy, of which the market system and the command system are the two general types.

Back 21

Economic System

Front 22

(1) An outward shift in the production possibilities curve that results from an increase in resource supplies or quality or an improvement in technology; (2) an increase of real output (gross domestic product) or real output per capita.

Back 22

Economic Growth

Front 23

A market in which products are sold by firms and bought by households.

Back 23

Product Market

Front 24

A market in which households sell and firms buy resources or the services of resources.

Back 24

Resource Market

Front 25

In what ways are resources scarce?

Back 25

1. Quantitatively limited
2. Limited alternative uses

Front 26

What are the assumptions for the production possibilities table?

Back 26

1. Full employment & full production
2. Supply of resources is fixed
3. Technology is constant
4. Only two goods are produced.