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Scarcity
indications that there is less of good available from nature than people would like
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Choice
act of selecting among alternatives
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resource
- input used to produce economic goods
- land, labor, skills, natural resources, capital
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capital
- human-made resources
- tools, equipment, structures
- enhance ability to produce in the future
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objective
fact based on observable phenomena that is not influenced by differences in personal opinion
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subjective
opinion based on personal preferences and value judgement
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rationing
allocation of limited supply of goods or resources among people
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economic theory
set of definitions, postulates, and principles assembled in manner that makes clear the cause and effect relationship
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opportunity cost
highest valued alternative that must be sacrificed
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economizing behavior
choosing the option that offers the greatest benefit at the least possible cost
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utility
subjective benefit or satisfaction a person expects from a choice or course of action
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marginal
describe the effects of a achange in the current situation
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secondary effects
indirect impact of an event or policy that may not be easily observable.
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positive economics
study of "what is" among economic relationship
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normative economics
judgement about "what ought to be" in economic matters
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ceteris paribus
- other things constant
- effect of one change is being described, recognized if other things change
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fallacy of composition
erroneous view that what is true for the individual will also be true for the group
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microeconomic
focuses on how human behavior effects the conduct of affairs within narrowly defined units
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macroeconomic
focuses on how human behavior effect outcomes in highly aggregated markets
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