Eco Chpt 1
Terms
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- Scarcity
- - the shortage that exists when less of something is available than is wanted at a zero price
- Economic Good
- - any item that is scarce
- free good
- - a good for which there is no scarcity
- economic bad
- - any item for which we would pay to have less
- resources, factors of production, or inputs
- - goods used to produce other goods, i.e. land, labor, and capital
- land
- - all natural resources, such as minerals, timber, and water, as well as land itself
- labor
- - the physical and intellectual services of people, including the training, education, and abilities of the individuals in society
- capital
- - products such as machinery and equipment that are used in production
- rational self-interest
- - the means by which people choose the options that give them greatest amount of satisfaction
- normative analysis
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- analysis of what ought to be
- conclusions based on opinion or value judgements do not advance one's understanding of events - fallacy of composition
- - the mistaken assumption that what applies in the case of one applies to the case of many
- association as causation
- - the mistaken assumption that because two events seem to occur together, one causes the other
- microeconomics
- - the study of economics at the level of the individual
- macroeconomics
- - the study of the economy as a whole