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### 31 Cards in this Set

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 Economics The social science concerned with teh efficient use of scarce resources to achieve the maximum satisfaction of economic wants. Economic Perspective Stresses resource scarcity, the necessity of making choices, the assumption of rational behavior, comparisons of marginal benefit and marginal cost. Utility pleasusre, happiness or satisfaction. Marginal Analysis comparing additional benefits and additional costs. Scientific Method Method used to draw conclusions, probabilities, models etc. theoretical economics systematically arrange facts, interpret and generalize them. Put them into cause and effect order. principles statmes about economic behavior or the economy that enable prediction of the probably effects. generalizations economic theories, laws, and principles, are often imprecise; expressed as typical tendencies. policy economics recognizes that theories and data can be used to formulate policies. how to find the slope of a curve measure the slope at a particular point on the line and solve for the slope of the corresponding tangent line. graph a visual representation of the relationship between two variables. horizontal axis normally represents this variable independent variable vertical axis normally represents this variable dependent variable direct relationship (positive relationship) two variable (x,y) change in the same direction. IE(x increases and y increases or x deacreases and y decreases) This can be identified by an upward sloping line. (line: from bottom left to top right) inverse relationship (negative relationship) two variables (x,y) change in opposite directions; IE(x increases and y decreases or x decreases and y increases). This can be identified by an downward sloping line. (line: from top left to bottom right) Other-Things-Equal Assumption (Ceteris Paribus) The assumption that other factors will be constant or unchanged. How to find the slope of a straight line. It is the ratio of vertical change to horizontal change or Rise over Run. Positive slope It is indicated by positive numbers and a positive linear relationship. Negative slope It is indicated by negative numbers and a negative linear relationship. Vertical Intercept The point where the line meets the vertical axis. Equation of a Linear Relationship y = mx + b or y = a + bx. Where y = dependent variable; x = independent variable; mx/bx = slope multiplied by x. + a/b = the vertical intercept. tradeoffs to achieve one we must sacrifice the other. Macroeconomics Examines the economy as a whole or its basic subdivisions or aggregates. Microeconomics Looks at specific economic units. Individual industry, firm, household, etc. positive economics focuses on facts and cause and effect relationships. normative economics incorporates value judgements as to the ideal economy. fallacy of consumption What is true for one individual is true for the whole. post hoc fallacy reasoning where, after x, or therefore because of x. Event A, although it precedes event B is not necessarily the cause of B. aggregate A collection of specific economic units treated as if they were one unit. economizing problem Society's wantes versus economic resources. scarce resources The limited quantities of land, labor, capital and entreprenureial ability.