Econ chapter one.txt

    • author "me"
    • fileName "Econ chapter one"
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    • description ""
    • Scarcity
    • There is less of a good freely available from nature than people would like.
  1. Choice
    The act of selecting among alternatives
  2. Resource
    An input used to produce economic goods. (land, labor, skills, natural resources, and capital)
  3. Capital
    Human-made resources used to produce other goods and services. (tools, equipment, and structures)
  4. Objective
    A fact based on an observable phenomena that is not influenced by differences in personal opinion
  5. Subjective
    Am opinion based on personal preferences and value judgments
  6. Rationing
    Allocating a limited supply of a good or resource among people who would like to have more of it.
  7. Economic theory
    A set of definitions, postulates, and principles assembled in a manner that makes clear the cause and effect relationships
  8. Opportunity cost
    The highest value alternative that must be defrauded as a result of choosing an option
  9. Economizing behavior
    Choosing the option that offers the greatest the greatest benfit at the least possible cost.
  10. Utility
    The subjective benefit or satisfation a person expects from a choice or course of action
  11. Marginal
    Term used to describe the effects of a change in the durrent situation. Ex: a producer's marginal cost is the cost of producing an additional unit of a product, given the producer's current facility and production rate
  12. Secondary effects
    The indirect impact of an event or policy that may not be easily and immediately observable. In the are of policy, these efects are often both unintended and overlooked
  13. Scientific thinking
    Developing a theory from basic principles and testing it against event in the real world. Good theories are consistent with and help explain real-worl events. theories that are inconsistent with the real world are invalid and must be rejected
  14. Positive economics
    The scientific study of "what is" among economic relationships.
  15. Normative Economics
    Judgements about "what ought to be" in economic matters. Normative economic views cannot be proven false because they are based on value judgements.
  16. Ceteris Paribus
    latin meaning "other things constant".
  17. Fallacy of composition
    what is true for the individual will also be true for the group.
  18. Microeconomics
    economics that focuses on how human behavior effects the conduct of affairs within narrowly defined units, such as individual households or business firms.
  19. Macroeconomics
    economics that focuses on how human behavior effects outcomes in highly aggregated markets, such as the markets for labor or consumer products.
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Econ chapter one.txt
the economic way of thinking.