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Economics Ch1
eco vocabulary
| Term | Definition |
|---|---|
| Economics | The study of how people, institutions, and society make economic choices under conditions of scarcity. |
| Opportunity Cost | The value of the good, service, or time forgone to obtain something else. |
| Marginal Analysis | The comparison of marginal (“extra” or “additional”) benefits and marginal costs, usually for decision making. |
| Utility | The satisfaction obtained from consuming a good or service. |
| Scientific Method | The systematic pursuit of knowledge by observing facts and formulating and testing hypotheses to obtain theories, principles, and laws. |
| Principles | Statements about economic behavior that enable effects of certain actions. |
| Microeconomics | The part of economics concerned with individual units such as a household, a firm, or an industry. |
| Other-Thing-Equal Assumptio | The assumption that factors other than those being considered do not change. |
| Macroeconomics | The part of economics concerned with the economy as a whole or major components of the economy. |
| Aggregate | A collection of specific economic units treated as if they were one unit. |
| Economic Problem | The need for individuals and society to make choices because wants exceed means. |
| Economic Perspective | A viewpoint that envisions individuals and institutions making rational decisions by comparing the marginal costs of their actions. |
| Budget Line | A line that shows various combinations of two products a consumer can purchase with a specific money income, given the product’s price. |
| Economic Resources | The land, labor, capital, and entrepreneurial ability used in the production of goods and services. |
| Land | Natural resources (“gifts of nature”) used to produce goods and services. |
| Labor | The physical and mental talents and efforts of people used to produce goods and services. |
| Capital | Human-made resources (buildings, machinery, and equipment) used to produce goods and services. |
| Investment | The purchase of capital resources. |
| Entrepreneurial Ability | The human talent that combines the other resources to produce a product, make strategic decisions, and bear risks. |
| Factors If Production | Economic Resources: land, labor, capital, and entrepreneurial ability. |
| Consumer Goods | Products and services that directly satisfy consumer wants. |
| Capital Good | Items that are used to produce other goods and therefore do not directly satisfy consumer wants. |
| Production Possibilities Curve | A curve showing the different combinations of goods and services that can be produced in a fully employed economy, assuming the available supplies of resources and technology are fixed. |
| Law Of Increasing Opportunity Costs | The principle that as the production of good increases, the opportunity cost of producing an additional unit rises. |
| Economic Growth: | An outward shift of the production possibilities curve that results from an increase in resource supplies or quality or an improvement in technology. |
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vjambriz
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