Econ Chapter 1 Part 1: Introduction to Economics – Flashcards
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Economics
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the study of how individuals and societies choose to use scarce resources
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Opportunity Cost
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the best alternative that we give up when we make a choice or decision
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Marginalism
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process of analyzing additional or incremental costs or benefits arising from a choice or decision
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Industrial Revolution
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period in England during the late 18th and early 19th centuries in which new manufacturing technology have rise to modern factories; people moved form countryside to cities
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Microeconomics
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examines how an individual industry or individuals make decisions; firms and households
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Macroeconomics
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examines economy on a national scale; aggregates; income, employment, output
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Positive statement
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fact based; how things are; clear of judgements
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Normative statement
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Value based statement; how things ought to be
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Model
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a formal statement of a theory, usually mathematical
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Ockham's razor
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principle that irrelevant detail should be cut away
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Ceteris Paribus
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all else equal; analyze the relationship between two variable while all other variables are unchanged
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Empirical economics
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the collection and use of data to test economic theories
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Efficiency
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economy that produces what people want at the least possible cost
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Four Things to Judge an Economy By
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efficiency, equity, growth, stability
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Stability
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national output is growing steadily, with low inflation and full employment of resources
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Equity
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fairness
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Economic Growth
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an increase in the total output of an economy
