UTK: Economics 201 - Chapter 1
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UTK: Economics 201 - Chapter 1
Economics University Tennessee Economics
Key Terms and Concepts from Chapter 1
The Study of how people use their scarce resources to satisfy their unlimited wants.
The inputs, or factors of productions, used to produce the goods and services that people want; resources consist of labor, capital, natural resource, and entrepreneurial ability.
The physical and mental effort used to produce goods and services.
The buildings, equipment, and human skills used to produce goods and services.
Define: Natural Resources
So called "gifts of nature" used to produce goods and services; includes renewable and exhaustible resources.
Define: Entrepreneurial Ability
Managerial and organizational skills needed to start a firm,combined with the willingness to take the risk of profit or loss.
A profit-seeking decision maker who starts with an idea, organizes an enterprise to bring that idea to life, and assumes the risk of the operation.
Payment to resource owners for their labor.
Payment to resource owners for the use of their capital.
Payment to resource owners for the use of their natural resources.
Reward for entrepreneurial ability; sales revenue minus resource cost.
A tangible product used to satisfy human wants.
An activity, or intangible product, used to satisfy human wants.
Occurs when the amount people desire exceeds the amount available at a zero price.
A set of arrangements by which buyers and sellers carry out exchange at mutually agreeable terms.
Define: Product Market
A market in which a good or service is bought and sold.
Define: Resource Market
A market in which a resources is bought and sold.
Define: Circular-Flow Model
A diagram that traces the flow of resources, products, income, and revenue among economic decision makers.
Define: Rational Self-Interest
Individuals try to maximize the expected benefit achieved with a given cost or to minimize the expected cost of achieving a given benefit.
Incremental, additional, or extra; used to describe a change in an economic variable.
The study of the economic behavior in particular markets, such as that for computers or unskilled labor.
The study of the economic behavior of entire economies.
Define: Economic Theory (Economic Model)
A simplification of reality used to make predictions about cause and effect in the real world.
A measure,such as price or quantity, that can take on different values at different times.
Define: Other-Things-Constant Assumption
The assumptions, when focusing on the relation among key economic variables, that other variables remain unchanged. Latin: ceteris paribus
Define: Behavioral Assumption
An assumption that describes the expected behavior of economic decision makers, what motivates them.
A theory about how key variables relate.
Define: Positive Economic Statement
A statement that can be proved or disproved by reference to facts
Define: Normative Economic Statement
A statement that reflects an opinion, which cannot be proved or disproved by reference to the facts.
Define: Association-is-Causation Fallacy
The incorrect idea that if two variables are associated in time, one must necessarily cause the other.
Define: Fallacy of Composition
The incorrect belief that what is true for the individual, or part, must necessarily be true for the group, or the whole.
Define: Secondary Effects
Unintended consequences of economic actions that may develop slowly over time as people react to events.
On a graph depicting two-dimensional space, the zero point.
Define: Horizontal Axis
Line on a graph that begins at the origin and extends left and right. The x-axis.
Define: Vertical Axis
Lined on a graph that begins at the origin and extends up and down. The y-axis.
If you don't know what a graph is I want you to quit using these flashcards, and immediately drop out of school. Thank you. Have a nice day.
Define: Dependent Variable
A variable whose value depends on that of the independent variable.
Define: Independent Variable
A variable whose value determines that of the dependent variable.
Define: Positive Relation (Direct Relation)
Occurs when two variables increase or decrease together; the two variables move in the same direction.
Define: Negative Relation (Inverse Relation)
Occurs when two variables move in opposite directions; when one increases, the other decreases.
Define: Slope of a Line
A measure of how much the vertical variable changes for a given increase in the horizontal variable; the vertical change between two points divided by the horizontal increase.
A straight line that touches a curve at a point but does not cut or cross the curve; used to measure the slope of a curve at a point.