econ ch 1 – Flashcards
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scarcity
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economic resources means limited goods and services
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opportunity costs
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to obtain more of one thing society forgoes the opportunity of getting the next best thing
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utility
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the pleasure, happiness or satisfaction obtained from consuming a good or service
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marginal analysis
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comparisons of marginal benefits and marginal costs usually for decision making
involves the comparison or evaluation of the additional cost versus the additional benefit of a decision
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economic principal
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a statement about economic behavior or the economy that enable prediction of the probable effects of certain actions
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other things assumptions
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the assumption that factors other than those being considered do not change
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microeconomics
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is the part of economics concerned with decision making by individual customers workers households and business firms
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macroeconomics
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examines the performance and behavior of the economy as a whole
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aggregate
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a collection of specific economic units treated as if they were one unit
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positive economics
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focuses on facts and cause and effect relationships; includes description, theory development and theory testing; avoids value judgements
what is
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normative economics
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incorporates value judgements about what the economy should be like or what particular policy actions should be recommended to achieve a desirable goal
what ought to be
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economizing problem
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the need to make choices because economic wants exceed economic means
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straight-line budget constraint
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opportunity costs
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scientific method
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like the physcial and life sciences as well as other social sciences economics relies on
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for better or worse people have virtually ____ wants
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unlimited
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the situation where one thing has to be given up in order to have some other item is called
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trade-off
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land and mineral resources, transportation and communication facilities, factories and farm buildings, equipment, tools and machinery are all examples of
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scarce economic resources
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four general categories of economic resources are
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entrepreneurship
natural resources
capital
labor
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land
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includes all natural resources used in the production process
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labor
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consists of physical actions and mental activities that people contribute to the production of goods and services
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capital
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includes all manufactured aids used in producing consumer goods and services
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investment
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describe spending that pays for the production and accumulation of capital goods
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the function of an entrepreneur is
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to combine scarce resources and to produce a good or service
to create new products
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production possibilities table
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A graph that describes the maximum amount of one good that can be produced for every possible level of production of the other good.
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a decrease in income will shift the budget line to the
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left
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advances in production technology enable a society to produce
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more goods with current or less resources
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budget line
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A line that shows the different combinations of two products a consumer can purchase with a specific money income, given the products' prices
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when individuals make decisions with some desired outcome in mind they are engaging in
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purposeful behavior
