econ ch 1

  1. Economics
    The study of how scarce or limited resources are used to satisfy unlimited wants and needs; the study of decision making in a world of scarcity
  2. Scarcity
    The result of not enough goods and services to satisfy all wants and needs
  3. Tradeoff
    Giving up one thing for something else
  4. Value judgement
    The relative importance one assigns to an action or alternative.
  5. Opportunity Cost
    The cost of a purchase or decision measured in terms of forgone alternative; what was given up to make a purchase or carry out a decision.
  6. Efficiency
    Producing the largest attainable output of a desired quality with a given set of resources, producing at the lowest possible cost.
  7. Equity
    Justice or fairness in the distribution of goods and services.
  8. Resources (factors of production)
    Persons and things used to produce goods and services; limited in amount; categorized as labor, capital, land and entrepreneurship.
  9. Labor
    Physical and mental human effort used to produce goods and services.
  10. Capital
    Items, such as machinery and equipment, used in the production of goods and services
  11. Land
    Productive inputs that orginate in nature, such as coal and fertile soil.
  12. Entrepreneneurship
    The function of organizing resources for production and taking the risk of success or failure in a productive enterprise.
  13. Wages
    Income return to labor
  14. Interest
    Income return to owners of capital
  15. Rent
    income return to owners of land resources
  16. Profit
    Income return to those performing the entrepreneurial function.
  17. Economic theory
    A formal explanation of the relationship between economic variables.
  18. Model
    The setting within which an economic theory is presented.
  19. Assumptions
    Conditions held to be true within a mode.
  20. Econometrics
    The use of statistical techniques to describe the relationships between economic variables.
  21. Economic Policy
    A guide for a course of action.
  22. Graph
    An illustration showing the relationship between two variables that are measured on the vertical and horizontal axes.
  23. Direct Relationship
    Two variables move in the same direction; when one increases, so does the other; graphs as an upward sloping line.
  24. Inverse Relationship
    Two variables move in opposite directions; when one increases, the other decreases; graphs as a downward sloping line
  25. Production Possibilities Table (or curve)
    Gives the various amounts of two goods that an economy can produce with full employment and fixed resources and technology
  26. Unemployment
    Resources available for production are not being used.
  27. Economic Growth
    An increase in an economy's full employment levle of output over time.
  28. Capital Goods
    Goods such as machinery and equipment that are used to produce other goods and services.
  29. Consumer Goods
    Goods, such as food and household furniture, that are produced for final buyers.
  30. Macroeconomics
    The study of the operation of the economy as a whole
  31. Microeconomics
    The study of individual decision making units and markets within the economy
Card Set
econ ch 1
chapter 1