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Macro Chapter 1
| Term | Definition |
|---|---|
| marginal thinking | the evaluation of whether the benefit of one more unit of something is greater than its cost (page 15) |
| economic thinking | a purposeful evaluation of the available opportunities to make the best decision possible (page 15) |
| macroeconomics | the study of the overall aspects and workings of an economy (page 7) |
| economics | the study of how individuals and society allocate their limited resources to satisfy their unlimited wants (page 6) |
| trade | the voluntary exchange of goods and services between two or more parties (page 19) |
| incentives | factors that motivate a person to exert effort (page 8) |
| opportunity cost | the highest-valued alternative that must be sacrificed to get something else (page 13) |
| scarcity | the limited nature of society's resources, given society's unlimited wants and needs (page 6) |
| markets | systems that bring buyers and sellers together to exchange goods and services (page 17) |
| comparative advantage | the situation where an individual, business, or country can produce at a lower opportunity cost than a competitor can (page 19) |
| Barter | involves individuals trading a good they already have or providing a service in exchange for something they want. (page 17) |
| microeconomics | the study of the individual units that make up the economy (page 7) |
| productive resources | the inputs used in the production of goods and services to make a profit |
| factors of production | Capital, Entrepreneurship, Land, Labor |
| Land | any natural resource, including actual land, but also trees, plants, livestock, wind, sun, water, etc. |
| economic Capital | anything that’s manufactured in order to be used in the production of goods and services. |
| Labor | any human service—physical or intellectual. Also referred to as human capital |
| human capital | Labor |
| Entrepreneurship | the ability of someone (an entrepreneur) to recognize a profit opportunity, organize the other factors of production, and accept risk. |
| economic goods | goods or services a consumer must pay to obtain; also called scarce goods |
| free goods | goods or services that a consumer can obtain for free because they are abundant relative to the demand |
| circular flow diagram | a diagram indicating that the economy consists of households and firms interacting in a goods-and-services market and a labor market |
| goods and services market | a market in which firms are sellers of what they produce and households are buyers |
| labor market | the market in which households sell their labor as workers to businesses or other employers |
| product market) | goods and services market |
Created by:
v.virgil
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