Economic Perspective
a viewpoint that envisions individuals and institutions making rational decisions by comparing the marginal benefits and marginal costs associated with their actions
Economics
The social science concerned with how individuals, institutions, and society make optimal choices under conditions of scarcity.
Opportunity Costs
To obtain more of one thing, society forgoes the opportunity of getting the next best thing.
Utility
The pleasure, happiness, or satisfaction obtained from consuming a good or service.
Marginal Analysis
Extra" "Additional" comparisons of marginal benefits and marginal costs
Scientific Method
a series of steps followed to solve problems including collecting data, formulating a hypothesis, testing the hypothesis, and stating conclusions
Economic Principle
A statement about economic behavior or the economy that enables prediction of probable effects of certain actions.
Generalizations
Economic principles are generalizations relating to economic behavior or to the economy itself.
other-things-equal assumption
the assumption that factors other than those being considered do not change.
Microeconomics
Part of economics concerned with decicion making by individual customers, workers, households and business firms
Macroeconomics
Either examines the economy asa a while or its basic subdivisions or aggregates, such as the government, household, and business sectors.
Aggregate
A collection of specific economic units treated as if they were one unit
Positive Economics
Focuses on facts and cause and effect relationships.
Normative Economics
Incorporates value judgements about what the economy should be like or what particular policy actions should be like or waht particular policy actions should be recommend to achieve a desireable goal.
Economizing Problem
The need to make choices because economic wants exceed economic means.
Budget Line
A shedule or curve that shows carious combinations of two products a consumer can purchase with a specific money income.
Economic Resources
Society has limited or scarce ecnomic resources, meaning all natural, human, and manufactured resources that go into the production of goods and services.
Land
Includes all natural resources, used in the production process. Includes forests,mineral, oil deposits, water resources, wind poet, sunlight.
Labor
Consists of the physical actions and mental activities that people contribute to the production of goods and services
Capital
All manufactured aids used in producing consumer goods and services.
Investment
Spending that pays for the production and accumulation of capital goods.
Entrepreneurial Ability
turns all land, capital and labor into what is hoped to be a succesful business venture. The driving force to put it all together
Factors of production
LAnd, labor, capital, and entrepreneurial ability combine to produce goods and services they are called factors of production or inputs.
Consumer Goods
Products that satisfy our wants directly
Capital goods
Products that satisfy our wants indirectly by making possible more efficient production of consumer goods
Production Possibilites Curve
Such a curve displays the different combinations of goods and services that society can produce in a fully employed economy.
Law of increasing opportunity costs
As the production of a particular good increases, the opportunity cost of producing an additional unit rises
Economic Growth
A larger total output