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31 Cards in this Set

  • Front
  • Back
The social science concerned with how individuals, institutions, and society make optimal (best) choices under conditions of scarcity.
The economic way of thinking
Economic perspective
To obtain more of one thing, society forgoes the opportunity of getting the next best thing.
Opportunity Costs
The pleasure, happiness, or satisfaction obtained from consuming a good or service
Comparisons of marginal benefits and marginal costs
Marginal analysis
Steps of Scientific Method
1. Observe real-world behavior and outcomes.
2. Hypothesis
3. Experiment/Observation/Survey, etc.
4. Accept, reject, modify hypothesis
5. Continue tests, if favorable results, hypothesis -> theory
A statement about economic behavior or the economy that enables prediction of the probable effects of certain actions.
Economic principle
The assumption that factors other than those being considered do not change.
Other-things-equal assumption, Ceteris Paribus
The part of economics concerned with decision making by individual customers, workers, households, and business firms.
Examines either the economy as a whole or its basic subdivisions or aggregates, such as the government, household, and business sectors.
A collection of specific economic units treated as if they were one unit.
Focuses on facts and cause-and-effect relationships
Positive economics
Economic policy which incorporates value judgments about what the economy should be like or what particular policy actions should be recommended to achieve a desirable goal.
Normative economics
The need to make choices because economic wants exceed economic means, scarcity
Economizing problem
A schedule or curve that shows various combinations of two products a consumer can purchase with a specific money income.
Budget line
All natural, human, and manufactured resources that go into the production of goods and services.
Economic resources
All natural resources ("gifts of nature") used in the production process.
Consists of the physical actions and mental activities that people contribute to the production of goods and services.
Includes all manufactured aids used in producing consumer goods and services.
Spending that pays for production and accumulation of capital goods
The ability to combine land, labor, and capital to produce a good or a service, make the strategic business decisions, make innovations, and to bear risk.
Entrepeneurial ability
Land, labor, captial, and entrepeneurial ability.
Factors of production, "inputs"
The economy is employing all of its available resources
Full employment
The quantity and quality of the factors of production are fixed
Fixed resources
The state of technology (the methods used to produce output) is constant
Fixed technology
The economy is producing only two goods.
Two goods
Products that satisfy our wants directly
Consumer goods
Products that satisfy our wants indirectly by making possible more efficient production of consumer goods
Capital goods
A curve that displays the different combinations of goods and services that society can produce in a fully employed economy, assuming a fixed availablity of supplies of resources and fixed technology
Production possibilities curve
As the production of a particular good increases, the opportunity cost of producing an additional unit rises.
Law of increasing opportunity costs
A larger total output
Economic growth