EKN Chapter 1 Flashcards
Economics
The social science concerned with how individuals, institutions and society make optimal choices under conditions of scarcity.
Economic perspective
A viewpoint that envisions individuals and institutions making rational decisions by comparing the marginal benefits and marginal costs associated with their actions.
Economic resources
The land, labor, capital and entrepreneurial ability that are used in the production of goods and services; productive agents; factors of production.
Opportunity cost
The amount of other products that must be forgone or sacrificed to produce a unit of a product.
Utility
The want-satisfying power of a good or service; the satisfaction or pleasure a consumer obtains from the consumption of a good or service.
Marginal analysis
The comparison of marginal benefits and marginal costs, usually for decision making.
Scientific method
The procedure for the systematic pursuit of knowledge involving the observation of facts and the formulation and testing of hypotheses to obtain theories, principles and laws.
Economic principle
A widely accepted generalization about the economic behavior of individuals or institutions.
Other-things-equal assumption
The assumption that factors other than those being considered are held constant.
Macroeconomics
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.
Aggregate
A collection of specific economic units treated as if they were one. For example, all prices of individual goods and services combines into a price level, or all units of output are aggregated into gross domestic product.
Microeconomics
The part of economics concerned with decision making by individual units such as a household, a firm or an industry and with individual markets, specific good and services, and product and resource prices.
Positive economics
The analysis of facts or data to establish scientific generalizations about economic behavior.
Normative economics
The part of economics involving value judgements about what the economy should be like; focused on which economic goals and policies should be implemented.
Budget line
A line that shows all the different combinations of two products a consumer can purchase with a specific money income, given the products’ prices.
