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31 Cards in this Set
- Front
- Back
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The social science concerned with how individuals, institutions, and society make optimal (best) choices under conditions of scarcity.
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Economics
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The economic way of thinking
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Economic perspective
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To obtain more of one thing, society forgoes the opportunity of getting the next best thing.
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Opportunity Costs
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The pleasure, happiness, or satisfaction obtained from consuming a good or service
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Utility
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Comparisons of marginal benefits and marginal costs
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Marginal analysis
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Steps of Scientific Method
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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 |
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A statement about economic behavior or the economy that enables prediction of the probable effects of certain actions.
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Economic principle
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The assumption that factors other than those being considered do not change.
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Other-things-equal assumption, Ceteris Paribus
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The part of economics concerned with decision making by individual customers, workers, households, and business firms.
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Microeconomics
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Examines either the economy as a whole or its basic subdivisions or aggregates, such as the government, household, and business sectors.
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Macroeconomics
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A collection of specific economic units treated as if they were one unit.
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Aggregate
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Focuses on facts and cause-and-effect relationships
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Positive economics
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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.
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Normative economics
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The need to make choices because economic wants exceed economic means, scarcity
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Economizing problem
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A schedule or curve that shows various combinations of two products a consumer can purchase with a specific money income.
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Budget line
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All natural, human, and manufactured resources that go into the production of goods and services.
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Economic resources
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All natural resources ("gifts of nature") used in the production process.
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Land
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Consists of the physical actions and mental activities that people contribute to the production of goods and services.
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Labor
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Includes all manufactured aids used in producing consumer goods and services.
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Capital
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Spending that pays for production and accumulation of capital goods
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Investment
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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.
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Entrepeneurial ability
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Land, labor, captial, and entrepeneurial ability.
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Factors of production, "inputs"
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The economy is employing all of its available resources
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Full employment
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The quantity and quality of the factors of production are fixed
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Fixed resources
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The state of technology (the methods used to produce output) is constant
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Fixed technology
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The economy is producing only two goods.
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Two goods
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Products that satisfy our wants directly
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Consumer goods
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Products that satisfy our wants indirectly by making possible more efficient production of consumer goods
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Capital goods
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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
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Production possibilities curve
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As the production of a particular good increases, the opportunity cost of producing an additional unit rises.
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Law of increasing opportunity costs
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A larger total output
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Economic growth
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