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34 Cards in this Set
- Front
- Back
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economics |
The social science concerned with how individuals, institutions, and society make optimal (best) choices under conditions of scarcity |
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economic perspective |
A viewpoint that envisions individuals and institutions making rational decisions by comparing the marginal benefits and marginal costs associated with their actions |
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opportunity cost |
The amount of other products that must be forgone or sacrificed to produce a unit of a product |
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utility |
The satisfaction a person gets from consuming a good or service |
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marginal analysis |
The comparison of marginal ("extra" or "additional") benefits and marginal costs, usually for decision making. |
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scientific method |
The systemic pursuit of knowledge through observing a problem, collecting data, and formulating and testing hypotheses to obtain theories, principles, and laws. |
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economic principle |
A statement about economic behaviour or the economy that makes it possible to predict the probable effects of certain actions. |
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other-things-equal assumption |
The assumption that factors other than those being considered are held constant |
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economic model |
A simplified picture of economic reality; an abstract generalization |
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microeconomics |
The part of economics concerned with such individual units as industries, firms, and households |
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macroeconomics |
The part of economics concerned with the economy as a whole |
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aggregate |
A collections of specific economic units treated as if they were one unit |
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positive economics |
The analysis of facts to establish cause-and-effect relationships ("what is") |
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normative economics |
The part of economics involving value judgements about what the economy should be like ("what should be") |
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economic problem |
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) |
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budget line |
A schedule or curve that shows various combinations of two products a consumer can purchase with a specific money income |
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tradeoff |
The sacrifice of some or all of one economic goal, good, or service to achieve some other goal, good or service |
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constant oppurtunity cost |
An opportunity cost that remains the same for each additional unit as a consumer (or society) shifts purchases (production) from one product to another along a straight-line budget line (production possibilities curve) |
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economic resources |
The land, labour, capital, and entrepreneurial ability that are used in the production of goods and services |
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land |
Natural resources used to produce goods and services |
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labour |
The physical and mental talents of individuals used in producing goods and services |
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capital |
Human-made resources (buildings, machinery, and equipment) used to produce goods and services |
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consumer goods |
Products and services that satisfy human wants directly ex. loaves of bread |
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capital goods |
Goods that do not directly satisfy human wants but do so indirectly by aiding the production of consumer goods ex. large commercial baking ovens |
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investment |
Spending for the production and accumulation of capital |
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entrepreneurial ability |
The human talents that combine the other resources to produce a product, make non-routine decisions, innovate, and bear risks |
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innovation |
The first successful commercial introduction of a new product, the first use of a new method of production, or the creation of a new form of business organization |
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factors of production |
aka "inputs" - Economic resources: land, labour, capital, and entrepreneurial ability |
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production possibilities table |
A table showing the different combinations of two products that can be produced with a a specific set of resources in a full-employment, full-production economy |
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production possibilities curve |
A 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 |
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law of increasing oppurtunity costs |
As the production of a good increases, the opportunity cost of producing an additional unit rises. |
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full production |
Employment of available resources so that the maximum amount of (or total value of) goods and services is produced; occurs when both productive efficiency and allocative efficiency are realized |
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economic growth |
An outward shift in the production possibilities curve that results from an increase in factor supplies or quality, or an improvement in technology; a larger total output |
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post hoc, ergo propter hoc fallacy |
Incorrectly reasoning that when one event precedes another the first event must have cause the second event |
