Chapter 1 Economics

Front 1

economics

Back 1

- The social science concerned with the efficient use of limited or scarce resources to achieve maximum satisfaction of human material 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

utility

Back 3

- The want-satisfying power of a good or service; the satisfaction or pleasure a consumer obtains from the consumption of a good or service (or from the consumption of a collection of goods and services).

Front 4

marginal analysis

Back 4

- The comparison of marginal (“extra” or “additional”) benefits and marginal costs, usually for decision making.

Front 5

scientific method

Back 5

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

Front 6

theoretical economics

Back 6

- The process of deriving and applying economic theories and principles.

Front 7

principles

Back 7

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

Front 8

generalizations

Back 8

- Statement of the nature of the relationship between two or more sets of facts.

Front 9

other-things-equal assumption

Back 9

- The assumption that factors other than those being considered are held constant.

Front 10

policy economics

Back 10

- The analysis of facts or data to establish scientific generalizations about economic behavior.

Front 11

tradeoffs

Back 11

- The sacrifice of some or all of one economic goal, good, or service to achieve some other goal, good, or service.

Front 12

macroeconomics

Back 12

- 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 13

aggregate

Back 13

- A collection of specific economic units treated as if they were one unit.

Front 14

microeconomics

Back 14

- 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 15

positive economics

Back 15

- The analysis of facts or data to establish scientific generalizations about economic behavior.

Front 16

normative economics

Back 16

- 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 17

fallacy of composition

Back 17

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

Front 18

“after this, therefore because of this,” fallacy

Back 18

- The fact that just because event A precedes event B, it is not certain that A is the cause of B.