Economics Ch1

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  1. Scarcity
    indications that there is less of good available from nature than people would like
  2. Choice
    act of selecting among alternatives
  3. resource
    • input used to produce economic goods
    • land, labor, skills, natural resources, capital
  4. capital
    • human-made resources
    • tools, equipment, structures
    • enhance ability to produce in the future
  5. objective
    fact based on observable phenomena that is not influenced by differences in personal opinion
  6. subjective
    opinion based on personal preferences and value judgement
  7. rationing
    allocation of limited supply of goods or resources among people
  8. economic theory
    set of definitions, postulates, and principles assembled in manner that makes clear the cause and effect relationship
  9. opportunity cost
    highest valued alternative that must be sacrificed
  10. economizing behavior
    choosing the option that offers the greatest benefit at the least possible cost
  11. utility
    subjective benefit or satisfaction a person expects from a choice or course of action
  12. marginal
    describe the effects of a achange in the current situation
  13. secondary effects
    indirect impact of an event or policy that may not be easily observable.
  14. positive economics
    study of "what is" among economic relationship
  15. normative economics
    judgement about "what ought to be" in economic matters
  16. ceteris paribus
    • other things constant
    • effect of one change is being described, recognized if other things change
  17. fallacy of composition
    erroneous view that what is true for the individual will also be true for the group
  18. microeconomic
    focuses on how human behavior effects the conduct of affairs within narrowly defined units
  19. macroeconomic
    focuses on how human behavior effect outcomes in highly aggregated markets
Card Set
Economics Ch1
Economics class @ NU
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