key terms Flashcards
what is a positive statement?
a factual statement that can be proven or tested wrong or right
what is a normative statement?
a value judgement/opinion that can only be debated
what is the opportunity cost?
the loss of benefit from choosing to buy one good over another good
what is scarcity?
the basic economic problem: unlimited wants but limited resources
what is an economic agent?
a household, business, or government that is forced to make decisions due to scarcity
what do households consider?
they choose how to spend money and make decisions on their labor
what do businesses consider?
how to produce their products and the price of their products to maximize profit
what do governments consider?
they make rules and influence others, like taxation. They also choose how to distribute income, goods, and services
what is a capital good?
goods bought by manufacturers to create consumer goods, without these there would be no capital goods
what is consumer goods?
goods bought by consumers directly, e.g. foods, drink, cars
what is a derivative good?
when the demand for a raw material changes when the demand for the products needed to make it changes
