Glossary of Economics 206 - WWU - Chapter 1

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Fundamental concept of economics that indicates that there is less of a good freely available from nature than people would like.
Scientific thinking
Development of a theory from basic postulates and the testing of the implications of that theory as to their consistency with events in the real world. Good theories are consistent with and help explain real-world events. Theories that are inconsistent with the real world are invalid and must be rejected.
Secondary effects
Consequences of an economic change that are not immediately identifiable but are felt only with the passage of time.
The subjective benefit or satisfaction a person expects from a choice or course of action.
The branch of economics that focuses on how human behavior affects the conduct of affairs within narrowly defined units, such as individual households or business firms.
Opportunity cost
The highest valued alternative that must be sacrificed as a result of choosing among alternatives.
Positive economics
The scientific study of "what is" among economic relationships.
Man-made resources (such as tools, equipment, and structures) that are used to produce other goods and services. They enhance our ability to produce in the future.
Ceteris paribus
A Latin term meaning 'other things constant,'used when the effect of one change is being described, recognizing that if other things changed, they also could affect the result. Economists often describe the effects of one change, knowing that in the real world, other things might change and also exert an effect.
The act of selecting among alternatives.
Economic theory
A set of definitions, postulates, and principles assembled in a manner that makes clear the "cause-and-effect" relationships of economic data.
Fallacy of composition
Erroneous view that what is true for the individual (or the part) will also be true for the group (or the whole).
The branch of economics that focuses on how human behavior affects outcomes in highly aggregated markets, such as the markets for labor or consumer products.
Economizing behavior
Choosing with the objective of gaining a specific benefit at the least possible cost. A corollary of the blank implies that, when choosing among items of equal cost, individuals will choose the option that yields the greatest benefit.
Term used to describe the effects of a change in the current situation. For example, the blank cost is the cost of producing an additional unit of a product, given the producer's current facility and production rate.
Normative economics
Judgments about "what ought to be" in economic matters. Blank economic views cannot be proved false, because they are based on value judgments.
An allocation of a limited supply of a good or resource to users who would like to have more of it. Various criteria, including charging a price, can be utilized to allocate the limited supply. When price performs the blank function, the good or resource is allocated to those willing to give up the most "other things" in order to obtain ownership rights.
An input used to produce economic goods. Land, labor, skills, natural resources, and capital are examples. Throughout history, people have struggled to transform available, but limited, blanks into things they would like to have-economic goods.

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