Chapter 1 Vocab

  1. Economics
    The study of how people manage resources.
  2. Book refers resources to
    Not just money and gold but intangible things such as time, ideas, technology, job experience and personal relationships.
  3. Microeconomics
    The study of how individuals and firms manage resources.
  4. Macroeconomics
    The study of the economy on a regional, national or international scale.
  5. Rational Behavior
    When people make choices to achieve their goals in the most effective way possible.
  6. What ties all types (Walmart, villages, baseball, running hospitals) together?
    These topics together is a common approach to problem solving.
  7. Scarcity
    • The condition of wanting more than we can get with available resources.
    • What are the wants and constraints of those involved?
  8. What are the four questions economists tend to ask to break down problems?
    • What are the wants and constraints of those involved?
    • What are the trade-offs?
    • How will others respond?
    • Why isn't everyone already doing it?
  9. Opportunity Cost
    The value of what you have to give up in order to get something; the value of your next-best alternative - the "opportunity you have to pass up in order to take your first choice.
  10. Marginal Decision Making
    The idea that rational people compare the additional benefits of a choice against the additional costs, without considering related benefits and costs of past choices.
  11. Sunk Costs
    Costs that have already been incurred and cannot be recovered.
  12. Incentive
    Something that causes people to behave in a certain way by changing the trade-offs they face.
  13. Efficiency
    Use of resources in the most productive way possible to produce the goods and services that have the greatest total economic value to society.
  14. Correlation
    • A consistently observed relationship between two events or variables
    • Positively correlated: Gas and Propane
    • Negatively correlated: Summer and Sweaters
    • Uncorrelated: Computers and trees
  15. Causation
    • A relationship between two events in which one brings about the other
    • Similar to correlation
    • No always go together via 3 major ways
  16. Positive Statement
    • A factual claim about how the world actually works
    • Cause and effects
    • A nuke with explosive power of 10Kilotons of TNT will have radius of up to 6 miles
  17. Normative Statement
    • A Claim about how the world should be
    • Assumption / Opinion
    • The US was right to use nuclear weapons in WW2
Card Set
Chapter 1 Vocab
Economics Vocab