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Define: Economics
The Study of how people use their scarce resources to satisfy their unlimited wants.
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Define: Resources
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.
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Define: Labor
The physical and mental effort used to produce goods and services.
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Define: Capital
The buildings, equipment, and human skills used to produce goods and services.
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Define: Natural Resources
So called "gifts of nature" used to produce goods and services; includes renewable and exhaustible resources.
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Define: Entrepreneurial Ability
Managerial and organizational skills needed to start a firm,combined with the willingness to take the risk of profit or loss.
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Define: Entrepreneur
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.
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Define: Wages
Payment to resource owners for their labor.
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Define: Interest
Payment to resource owners for the use of their capital.
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Define: Rent
Payment to resource owners for the use of their natural resources.
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Define: Profit
Reward for entrepreneurial ability; sales revenue minus resource cost.
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Define: Good
A tangible product used to satisfy human wants.
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Define: Service
An activity, or intangible product, used to satisfy human wants.
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Define: Scarcity
Occurs when the amount people desire exceeds the amount available at a zero price.
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Define: Market
A set of arrangements by which buyers and sellers carry out exchange at mutually agreeable terms.
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Define: Product Market
A market in which a good or service is bought and sold.
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Define: Resource Market
A market in which a resources is bought and sold.
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Define: Circular-Flow Model
A diagram that traces the flow of resources, products, income, and revenue among economic decision makers.
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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.
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Define: Marginal
Incremental, additional, or extra; used to describe a change in an economic variable.
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Define: Microeconomics
The study of the economic behavior in particular markets, such as that for computers or unskilled labor.
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Define: Macroeconomics
The study of the economic behavior of entire economies.
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Define: Economic Theory (Economic Model)
A simplification of reality used to make predictions about cause and effect in the real world.
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Define: Variable
A measure,such as price or quantity, that can take on different values at different times.
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Define: Other-Things-Constant Assumption
The assumptions, when focusing on the relation among key economic variables, that other variables remain unchanged. Latin: ceteris paribus
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Define: Behavioral Assumption
An assumption that describes the expected behavior of economic decision makers, what motivates them.
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Define: Hypothesis
A theory about how key variables relate.
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Define: Positive Economic Statement
A statement that can be proved or disproved by reference to facts
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Define: Normative Economic Statement
A statement that reflects an opinion, which cannot be proved or disproved by reference to the facts.
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Define: Association-is-Causation Fallacy
The incorrect idea that if two variables are associated in time, one must necessarily cause the other.
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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.
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Define: Secondary Effects
Unintended consequences of economic actions that may develop slowly over time as people react to events.
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Define: Origin
On a graph depicting two-dimensional space, the zero point.
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Define: Horizontal Axis
Line on a graph that begins at the origin and extends left and right. The x-axis.
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Define: Vertical Axis
Lined on a graph that begins at the origin and extends up and down. The y-axis.
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Define: Graph
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.
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Define: Dependent Variable
A variable whose value depends on that of the independent variable.
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Define: Independent Variable
A variable whose value determines that of the dependent variable.
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Define: Positive Relation (Direct Relation)
Occurs when two variables increase or decrease together; the two variables move in the same direction.
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Define: Negative Relation (Inverse Relation)
Occurs when two variables move in opposite directions; when one increases, the other decreases.
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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.
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Define: Tangent
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.
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