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24 Cards in this Set

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Scarcity
the amount of the good that people want is greater than the amount that is available
Economic goods
anything that has the condition of scarcity-time, income, wealth, etc.
Free good
a good for which there is no scarcity
Economic bad
any itme for which we would pay to have less
Resources, factors of production, or inputs
goods used to produce other goods--land, labor, and capital
land
all natural resources, such as minerals, timber, and water, as well as the land itself
labor
the physical and intellectual services of people, including the training, education and abilities of the individuals in a society
capital
products such as machinery and equipment that are used in production
Rational self-interest
the means by which people choose the options that give them the greatest amount of satisfaction
positive analysis
analysis of what is
normative analysis
analysis of what ought to be. conclusion based on opinion or value judgements do not advance one's understanding of events...hmmmm
Fallacy of composition
the mistaken assumption that what applies in the case of one applies to the case of many
association as causation
themistaken assumption that because two events seem to occur together, one causes the other
Microeconomics
the study of economics at the level of the individual
Macroeconomics
the study of the economy as a whole
Opportunity costs
the highest-valued alternative that must be forgone when a choise is made
tradeoff
the giving up of one good or activity in order to obtain some other good or activity
marginal cost
additional cost
marginal benefit
additional benefit
production possibilities curve (PPC)
a graphical representation showing the maximum quantity of goods and services that can be produced using limited resources to the fullest extent possible
marginal opportunity cost
amount of one good or service that must be given up to obtain one additional unit of another good or service, no matter how namy units are being produced
individuals, firms, and nations select the option with the lowers opportunity costs
specialization
Trade
by specializing in the activities in which opportunity costs are lowest and then trading, each will end up with more individual efforts
Comparitive advantage
the ability to produce a good or service at a lower opportunity cost that someone else