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38 Cards in this Set
- Front
- Back
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economics
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The study of how individuals and societies choose to use the scarce resources that nature and previous generations have provided.
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opportunity cost
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The best alternative that we forgo, or give up, when we make a choice or a decision.
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scarce
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Limited
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marginalism
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The process of analyzing the additional or incremental costs or benefits arising from a choice or decision.
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sunk costs
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Costs that cannot
be avoided, regardless of what is done in the future, because they have already been incurred. |
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efficient market
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A market in which profit opportunities are eliminated almost instantaneously
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Industrial Revolution
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period of 18th and early 19th centuries in England in which new manufacturing technologies and improved transportation gave rise to the modern factory system and a massive movement of the population from the countryside to the cities.
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microeconomics
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The branch of economics that examines the functioning of individual industries and the behavior of individual decision-making units—that is, business firms and households.
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macroeconomics
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The branch of economics that examines the economic behavior of aggregates—income, employment, output, and so on—on a national scale.
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Comparative economic
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examines the ways alternative economic systems function. What are the advantages and disadvantages of different systems?
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Econometrics
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applies statistical techniques and data to economic problems in an effort to test hypotheses and theories. Most schools require economics majors to take at least one course in statistics or econometrics.
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Economic development
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focuses on the problems of low-income countries. What can be done to promote development in these nations? Important concerns of development economists include population growth and control, provision for basic needs, and strategies for international trade.
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Economic history
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traces the development of the modern economy. What economic and political events and scientific advances caused the Industrial Revolution? What explains the tremendous growth and progress of post—World War II Japan? What caused the Great Depression of the 1930s?
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Economics of race and gender
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examines the role of race and gender in economic theory, in economic life, and in policymaking. How has discrimination by race or gender affected the well-being of households and the distribution of income and wealth?
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Environmental economics
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studies the potential failure of the market system to account fully for the impacts of production and consumption on the environment and on natural resource depletion. Have alternative public policies and new economic institutions been effective in correcting these potential failures?
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Finance
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examines the ways in which households and firms actually pay for, or finance, their purchases. It involves the study of capital markets (including the stock and bond markets), futures and options, capital budgeting, and asset valuation.
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The history of economic thought,
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which is grounded in philosophy, studies the development of economic ideas and theories over time, from Adam Smith in the eighteenth century to the works of economists such as Thomas Malthus, Karl Marx, and John Maynard Keynes. Because economic theory is constantly developing and changing, studying the history of ideas helps give meaning to modern theory and puts it in perspective.
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Industrial organization
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looks carefully at the structure and performance of industries and firms within an economy. How do businesses compete? Who gains and who loses?
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International economics
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studies trade flows among countries and international financial institutions. What are the advantages and disadvantages for a country that allows its citizens to buy and sell freely in world markets? Why is the dollar strong or weak?
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Labor economics
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deals with the factors that determine wage rates, employment, and unemployment. How do people decide whether to work, how much to work, and at what kind of job? How have the roles of unions and management changed in recent years?
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Law and economics
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analyzes the economic function of legal rules and institutions. How does the law change the behavior of individuals and businesses? Do different liability rules make accidents and injuries more or less likely? What are the economic costs of crime?
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Public economics
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examines the role of government in the economy. What are the economic functions of government, and what should they be? How should the government finance the services that it provides? What kinds of government programs should confront the problems of poverty, unemployment, and pollution? What problems does government involvement create?
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Urban and regional economics
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studies the spatial arrangement of economic activity. Why do we have cities? Why are manufacturing firms locating farther and farther from the center of urban areas?
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positive economics
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An approach to economics that seeks to understand behavior and the operation of systems without making judgments. It describes
what exists and how it works. |
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normative economics
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An approach to economics that analyzes outcomes of economic behavior, evaluates them as good or bad, and may prescribe courses of action. Also called policy economics.
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descriptive economics
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The compilation of data that describe phenomena and facts.
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economic theory
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A statement or set of related statements about cause and effect, action and reaction.
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model
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A formal statement of a theory, usually a mathematical statement of a presumed relationship between two or more variables.
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variable
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A measure that can change from time to time or from observation to observation.
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Ockham’s razor
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The principle that irrelevant detail should be cut away.
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ceteris paribus
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, or all else equal A device used to analyze the relationship between two variables while the values of other variables are held unchanged.
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post hoc, ergo propter hoc
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Literally, “after this (in time), therefore because of this.” A common error made in thinking
about causation: If Event A happens before Event B, it is not necessarily true that A caused B. |
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fallacy of composition
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The erroneous belief that what is true for a part is necessarily true for the whole.
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empirical economics
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The collection and use of data to test economic theories.
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efficiency
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In economics, allocative efficiency. An efficient economy is one that produces what people want at the least possible cost.
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equity
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Fairness.
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economic growth
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An increase in the total output of an economy.
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stability
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A condition in which
national output is growing steadily, with low inflation and full employment of resources. |
