Economics Chapter 1 Terms – Basic Principles of Economics

question

economize
answer

to use limited resources efficiently in production; use resources wisely
question

oikos
answer

the Greek word for “household” or “family estate”
question

nemo
answer

the Greek word for “to manage”
question

oikonomia
answer

the Greek word that refers to the science of household or estate management
question

economics
answer

the study of the way society makes decisions about the use of scarce resources
question

social science
answer

science, such as economics, history, and sociology, that studies some aspect of human behaviour
question

effective
answer

a particular use of resources that achieves a desired end, such as consumption
question

efficient
answer

the use of a bare minimum of resources necessary to achieve a desired end, such as consumption
question

needs
answer

basic human physical requirements necessary to sustain life, such as food, clothing, and shelter
question

wants
answer

the desire for goods or services not essential to sustain human life, such as stylish clothing, exotic foods, jewellery, or travel in the tropics
question

goods
answer

the concrete, physical products we manufacture, such as furniture and automobiles
question

services
answer

the activities we engage in and sell to others, such as medical and retail services
question

resources
answer

all those elements used in the production of goods and services designated to meet our needs and wants
question

natural resources
answer

all the resources in nature that have value, such as land, minerals, fresh water, and forests
question

human resources
answer

also called labour, the human efforts used in the production of good and services
question

capital resources
answer

goods used in the production of other goods and services, such as factories, machines, and tools
question

scarcity
answer

the fact that only a limited amount of resrouces is available to produce a limited number of goods and services to meet ralatively unlimited human wants
question

economic goods
answer

goods that are scarce and have economic values
question

free goods
answer

goods that have no scarcity and exist in sufficient quantities to satisfy everyone’s wants
question

opportunity cost
answer

the cost of all that is lost from taking one course of action over another; the second best choice you give up in order to get your best choice
question

analytical economics
answer

another word for positive economics; the branch of economics that deals with facts and direct observation of the world
question

positive economics
answer

another word for analytical economics, concerned with descriptive and conditional statements
question

descriptive statement
answer

a statement which portrays things as they are in the present or have been in the past
question

conditional statement
answer

a forecast based on the careful analysis of economic behaviour
question

normative economics
answer

another word for policy economics; the branch of economics that deals with value judgements about economic subjects rather than facts and observations
question

policy economics
answer

another word for normative economics; deals with value judgements
question

normative statement
answer

a statement which expresses what a particular economicst or group of economists thinks should be the case, based on their value judgements; a statement that cannot be confirmed or refuted solely by reference to facts
question

origin
answer

as used in graphs, the point at which the vertical and horizontal axes meet
question

x-axis
answer

as in graphs, the axis where quantity is plotted along
question

y-axis
answer

as in graphs, the axis where price is plotted along
question

inverse relationship
answer

as in graphs, the relationship which the line illustrates a downward slope of the relationship between two variables
question

scientific method
answer

a method of study used to make discoveries in natural science and social sciences
question

observation
answer

the first basic component of the scientific method
question

data collection
answer

the second basic component of the scientific method
question

explanation
answer

the third basic component of the scientific method
question

verification
answer

the fourth basic component of the scientific method
question

Francis Bacon
answer

the English scientist who first outlined the four basic components of the scientific method
question

economics
answer

the science of scarcity and choice
question

human behaviour and value systems
answer

two things which greatly complicate studies in the social sciences
question

Xenophon
answer

a free citizen-soldier of Athens around 430 BCE; the father of economics who wrote the book Oeconomicus
question

oikos
answer

the basic unit of classical Greek society; a large family estate or houshold, including land, crops, a house, family members, slaves, animals, and accumulated wealth
question

agriculture
answer

what the economy of Greece was based on
question

knowledge of group behaviour and general tendencies
answer

the two kinds useful information for decision makers
question

economy
answer

a self-sustaining system in which many independent transactions (often triggered by self-interest) create distinct flows of money and products
question

economy
answer

a very complex or intricate system
question

economy
answer

it is dynamic or subject to movements and exchanges
question

economy
answer

it consists of interdependent people, groups, and institutions, each performing specialized roles
question

economy
answer

it involves a series of independent transactions motivated by economic goals
question

economy
answer

it involves numerous transactions that create two circular flows (money moves in one direction while goods and services move in the opposite direction
question

descriptive statement
answer

which kind of statement is this, “Automobile sales in Canada in this quarter are 7 percent higher than in the last quarter.”
question

conditional statement
answer

which kind of statement is this, “If the price of cigarettes decreases, the quantity purchased will increase.”
question

descriptive statement
answer

which type of statement is this: factual observations that can be verified or confirmed
question

conditional statement
answer

which type of statement is this: forecasts
question

conditional statement
answer

which type of statement is this: If income taxes are reduced, consumer spending will increase
question

normative statement
answer

which type of statement is this: Governments should provide affordable daycare for working parents
question

normative statement
answer

which type of statement is this: cannot be confirmed or refuted solely by reference to facts
question

normative statement
answer

which type of statement is this: it requires political decision making focused on the common good or the collectie well-being of a society
question

fallacy
answer

a hypothesis that has been proven false but is still accepted by many people because it appears to make sense
question

fallacy of composition
answer

a mistaken belief that what is good for an individual is automatically good for everyone, or vise versa
question

fallacy of composition
answer

which fallacy does free trade represent
question

fallacy of single causation
answer

a mistaken belief, based on oversimplification, that a particular event has one cause rather than several
question

fallacy of single causation
answer

which fallacy does it contain: stock market crash caused the Great Depression
question

cause-and-effect fallacy
answer

a mistaken belief that what occurs before some event is logically the cause of it
question

post hoc fallacy
answer

another name for cause-and-effect fallacy
question

production possibilities curve
answer

a graphical representation of the production choices facing an economy
question

production possibilities curve
answer

it illustrates the fundamental problem of scarcity
question

production possibilities curve
answer

this model is based on the premise of only two products can be produced by this economy
question

production possibilities curve
answer

this graph is based on the premise of fixed technology and resource
question

production possibilities curve
answer

the illustration is based on the premise of full employment
question

trade-off
answer

the increased production of one good can be achieved only by sacrificing a sufficient quantity of the alternative product
question

consumer goods
answer

products and services that directly satisfy human wants
question

capital goods
answer

goods used in the production of other goods
question

capital resource
answer

which type of resource does seed belong to
question

relative cost
answer

the cost of producing one item, A, expressed in terms of the number of another item, B, which must be given up in order to produce A
question

relative cost
answer

the opportunity cost involved in a production possibilities curve
question

law of increasing relative cost
answer

the increase in the relative cost of producing more of item A, measured by the numbers of another item, B, that could be produced with the same resources
question

bowed-out or concave
answer

the shape of a production possibilities curve representing the law of increasing relative cost
question

law of diminishing returns
answer

the eventual decline in the rate of extra outputs produced that occurs when one input used in production of the output is held constant and the others are increased
question

law of increasing returns to scale
answer

the increase in the rate of extra outputs produced when all inputs used in production are increased and no inputs are held constant
question

frontier
answer

the curve on a production possibilities graph representing the maximum numbers of two items that can be produced with a given amount of resources
question

input
answer

a productive resource such as land, labour, or capital used to produce an output
question

output
answer

the products produced by using resources or inputs such as land, labour, or capital
question

fallacy of single causation
answer

which fallacy is presented: An economic crisis in Japan caused the 1998 decline of the Canadian dollar in international money markets
question

fallacy of composition
answer

which fallacy is presented: What is good for General Motors is good for the Canadian economy
question

post hoc fallacy or cause-and-effect fallacy
answer

which fallacy is presented: Victoria, British Columbia, has one of the highest death rates in the country, therefore, it must be unhealthy to live there
question

fallacy of composition
answer

which fallacy is presented: Jasna found the work experience she got through her school’s co-op to be of great personal benefit, Co-op should be a compulsory requirement for all secondary school students
question

fallacy of single causation
answer

which fallacy is presented: A multi car acident on the Trans-Canada Highway was caused by bad weather
question

fallacy of composition
answer

which fallacy is presented: If every Canadian worker received a 10 percent pay increase, the nation as a whole would be better off
question

fallacy of single causation
answer

which fallacy is presented: Former prime minister Brian Mulroney was responsible for the economic recession of 1990.
question

post hoc fallacy or cause-and-effect fallacy
answer

which fallacy is presented: Ali’s marks improved after she broke up with Evan. He was not a good influence

Get instant access to
all materials

Become a Member