econ chapter 1
Terms
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- production possibilities curve
- a curve showing the different combinations of two goods or services that can be produced in a full-employment, full-production economy where the available supplies of resources and technology are fixed
- law of increasing opportunity costs
- the principle that as the production of a good increases, the opportunity cost of producing an additional unit rises
- positive economics
- the analysis of facts or data to establish scientific generalizations about economic behavior
- economic perspective
- a viewpoint that envisions individuals and institutions making rational decisions by comparing the marginal benefits and marginal costs associated with their actions
- economizing problem
- the choices necessitated because society's economic wants for goods and services are unlimited but the resources available to satisfy these wants are limited (scarce)
- budget line
- the line that shows the different combinations of two products a consumer can purchase with a specific money income, given the products' prices
- aggregate
- a collection of specific economic units treated as if they were one
- land
- natural resources used to produce goods and services
- scientific method
- observation of facts and the formulation and testing of hypotheses to obtain theories, principles, and laws
- capital
- human-made resources (buildings, machinery, equipment) used to produce goods and services
- other-things-equal assumption
- the assumption that factors other than those being considered are held constant
- entrepreneurial ability
- the human resource that combines the other resources to produce a product, makes non-routine decisions, innovates, and bears risks
- factors of production
- economic resources: land, capital, labor, and entrepreneurial ability
- investment
- spending for the production and accumulation of capital and additions to inventories
- economics
- the social science that examines how individuals, institutions, and society make optimal choices under conditions of scarcity
- utility
- the satisfaction or pleasure a consumer obtains from the consumption of a good or service
- economic resources
- the land, labor, capital, and entrepreneurial ability that are used in the production of goods and services
- consumer goods
- products and services that satisfy human wants directly
- normative economics
- economic analysis involving value judgments about what the economy should be like
- opportunity cost
- the amount of other products that must be forgone or sacrificed to produce a unit of a product
- macroeconomics
- looks at the economy as a whole or its major aggregates
- marginal analysis
- the comparison of marginal ("extra" or "additional") benefits and marginal costs, usually for decision making
- labor
- people's physical and mental talents and efforts that are used to help produce goods and services
- capital goods
- goods that do not directly satisfy human wants
- economic growth
- an outward shift in the production possibilities curve that results from an increase in resource supplies or quality or an improvement in technology
- economic principle
- a widely accepted generalization about the economic behavior of individuals or institutions
- microeconomics
- examines specific economic units or institutions