Microeconomics Chapter 1

Front 1

economics

Back 1

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

Front 2

economic perspective

Back 2

a viewpoint that envisions individuals and institutions making rational decisions by comparing the marginal benefits and marginal costs associated with their actions

Front 3

marginal analysis

Back 3

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

Front 4

scientific method

Back 4

the procedure for the systematic pursuit of knowledge involving the observation of facts and the formulation and testing of hypotheses to obtain theories, principles, and laws

Front 5

theoretical economics

Back 5

the process of deriving and applying economic theories and principles

Front 6

principles

Back 6

statements about economic behavior or the economy that enable prediction of the probable effects of certain actions

Front 7

generalization

Back 7

statement of the nature of the relationship between 2 or more sets of facts

Front 8

other-things-equal assumption

Back 8

the assumption that factors other than those being considered are held constant

Front 9

policy economics

Back 9

the formulation of courses of action to bring about desired economic outcomes or to prevent undesired occurrences

Front 10

tradeoff

Back 10

the sacrifice of some or all of one economic goal, good, or service to achieve some other goal, good, or service

Front 11

macroeconomics

Back 11

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

Front 12

aggregate

Back 12

a collection of specific economic units treated as if they were one unit

Front 13

microeconomics

Back 13

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

Front 14

positive economics

Back 14

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

Front 15

normative economics

Back 15

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

Front 16

fallacy of composition

Back 16

the false notion that what is true for the individual (or part) is necessarily true for the group (or whole)

Front 17

"after this, therefore because of this," fallacy

Back 17

the incorrect thinking that because event A precedes event B, A is the cause of B