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28 Cards in this Set

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  • Back
Economics
The social science concerned with how individuals, institutions, and society make optimal (best) choices under conditions of scarcity.
Economic Perspective
A viewpoint that envisions individuals and institutions making rational decisions by comparing the marginal benefits and marginal costs associated with their actions.
Opportunity Cost
The amount of other products that must be forgone or sacrificed to produce a unit of a product.
Utility
The want-satisfying power of a good or service; the satisfaction or pleasure a consumer obtains from the consuption of a good or service (or from the consuption of a collection of goods and services).
Marginal Analysis
The comparison of marginal ("extra" or "additional") benefits and marginal costs, usually for decision making.
Scientific Method
The procedure for the systematic pursuit of knowledge involving the observation of facts and teh formulation and testing of hypothesis to obtain theories, principles, and laws.
Economic Principle
A widely accepted generalization about the economic behavior of individuals or institutions.
Other-Things-Equal Assumption
The assumption that factors other than those being considered are held constant; ceteris paribus assumption.
Macroeconomics
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.
Aggregate
A collection of specific economic units treated as if they were one. For example, all prices of individual goods and services are combined into a price level and the real domestic output.
Ceteris Paribus Assumption
The Other-Things-Equal Assumption. The assumption that factors other than those being considered are held constant.
Microeconomics
The part of economics concerned with decision making by individual units such as a household, a firm, or an industry and with individual markets, specific goods and services, and product and resource prices.
Positive Economics
The analysis of facts or data to establish scientific generalizations about economic behavior.
Normative Economics
The part of economics involving value judgements about what the economy should be like; focused on which economic goals and policies should be implemented; policy economics.
Economizing Problem
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).
Budget Line
Also called a Budget Constraint. It is a schedule or curve that shows various combinations of two products a consumer can purchase with a specific money income.
Economic Resources
The land, labor, capital, and entrepreneurial ability that are used in the production of goods and services; productive agents; factors of production.
Land
Natural resources ("free gifts of nature") used to produce goods and services.
Labor
People's physical and mental talents and efforts that are used to help produce goods and services.
Capital
Human-made resources (buildings, machinery, and equipment) useed to produce goods and services; goods that do not directly satisfy human wants; also called capital goods.
Entrepreneurial Ability
The human resource that combines the other resources to produce a product, makes nonroutine decisions, innovates, and bears risks.
Factors of Production
Economic resources; land, capital, labor, and entrepreneurial ability.
Consumer Goods
Products and services that satisfy human wants directly.
Production Possibilities Curve
A curve showing the different combinations of two goods or services that can be produced in a full-employment, full-production economy where the available supplies of resources and technology are fixed.
Law of Increasing Opportunity Costs
The principle that as the production of a good increases, the opportunity cost of producing an additional unit rises.
Economic Growth
(1) An outward shift in the production possiblities 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.
Investment
Spending for the production and accumulation of capital and additions to inventories.
Capital Goods
Same as Capital. Human-made resources (buildings, machinery, and equipment) used to produce goods and services; goods that do not directly satisfy human wants.