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