Chapter 1 - Limits, Alternatives, and Choices Flashcards
Economic Perspective
A viewpoint that envisions individuals and institutions make rational decisions by comparing the marginal benefits and marginal costs associated with their actions.
Economics
The social science concerned with how individuals, institutions, and society make optimal choice is under conditions of scarcity.
Opportunity Costs
The amounts of other products that must be for gone or sacrifice to produce a unit of a product.
Utility
The satisfaction of person gets from consuming a good or service.
Wage
The price paid for the users services of labor per unit of time (per hour, per day, and so on).
Profit
The return to the resource entrepreneurial ability; total revenue minus total cost.
Marginal Analysis
The comparison of marginal benefits and marginal costs, usually for decision-making.
Marginal Benefit
The additional benefit of consuming one more unit of some service are good; the change in total benefit one one more unit is consumed.
Marginal Cost
The additional cost of producing one more unit of output; equal to the change in total cost divided by the change in output and in the short run to changing total variable cost divided by the change in output.
Scientific Method
The systematic pursuit of knowledge through formulating a problem, collecting data, and formulating and testing hypotheses to obtain theories, principles, and laws.
Economic Law
And economic principle that has been tested and retested and have stood the test of time.
Economic principle
A statement about economic behavior or the economy going to Nemos prediction of the probable effects of certain actions.
Generalization
Statement of the nature of the relation between two or more sets of facts.
Price
The amount of money needed to buy a particular good, service, resource.
Other things equal assumption
The assumption that factors other than those being considerate are held constant.
Economic model
A simplified picture of economic reality; an abstract generalization.
Microeconomics
The part of economics concern with such individual units as industries, firms, and households.
Macroeconomics
The part of economics concerned with the economy as a whole.
Aggregate
A collection of specific economic units treated as if they were one unit.
Positive economics
The analysis of facts to establish cause and effect relationships.
Economic policy
A course of action intended to correct or avoid a problem.
Normative economics
The part of economics involving value judgments about what the economy should be like.
Economic problem
The need to make choices because societies material wants for goods and services are unlimited but the resources available to satisfy these wants are limited.
Unlimited wants
The insatiable desire of consumers for goods and services that will give them satisfaction or utility.
Budget line
A schedule or curve that shows various combinations of two products to consumers can purchase with a specific money income.
Trade-off
The sacrifice of summer all of one economical, good, our service to achieve some other goal, good, or service.
Economic resources
The land, labor, capital, and entrepreneurial ability that are used in the production of goods and services.
Land
Natural resources used to produce goods and services.
Labor
The physical and mental tones of individuals used in producing goods and services.
Capital
Human made resources for example: buildings, machinery and equipment, used to produce goods and services.
Money capital
Money available to purchase capital.
Consumer goods
Products and services that satisfy human wants directly.
Capital goods
Good satisfy human wants indirectly by eating the production of consumer goods.
Investment
Spending for the production an accumulation of capital.
Entrepreneurial ability
The human talents to combine the other resources to produce a product, make nonroutine decisions, innovate, and bear risks.
Factors of production
Economic resources: land, Labor, capital, and entrepreneurial ability
Scarce resources
The limited quantities of land, capital, labor, and entrepreneurial ability there never sufficient to satisfy the virtually unlimited material wants of humans.
Technology
The body of knowledge and techniques that can be used to produce goods and services from economic resources.
Production possibilities curve
A curve showing the different combinations of goods or services that can be produced in a full employment, full production economy for the available supplies of resources and technology are fixed.
Full employment
Use of all available resources to produce want to satisfying goods and services.
Law of increasing opportunity costs
As the production of a good increases, the opportunity cost of producing an additional unit rises.
Economic growth
An outward shift in the production possibilities curve the results from an increase in factor supplies or quality or an improvement in technology.
Fallacy of composition
The false notion that what is true for the individual or part is necessarily true for the group or whole.
