UTK: Economics 201 - Chapter 1

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volfan13
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34970
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UTK: Economics 201 - Chapter 1
Updated:
2010-09-16 01:40:09
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Economics University Tennessee Economics
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Key Terms and Concepts from Chapter 1
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  1. Define: Economics
    The Study of how people use their scarce resources to satisfy their unlimited wants.
  2. 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.
  3. Define: Labor
    The physical and mental effort used to produce goods and services.
  4. Define: Capital
    The buildings, equipment, and human skills used to produce goods and services.
  5. Define: Natural Resources
    So called "gifts of nature" used to produce goods and services; includes renewable and exhaustible resources.
  6. Define: Entrepreneurial Ability
    Managerial and organizational skills needed to start a firm,combined with the willingness to take the risk of profit or loss.
  7. 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.
  8. Define: Wages
    Payment to resource owners for their labor.
  9. Define: Interest
    Payment to resource owners for the use of their capital.
  10. Define: Rent
    Payment to resource owners for the use of their natural resources.
  11. Define: Profit
    Reward for entrepreneurial ability; sales revenue minus resource cost.
  12. Define: Good
    A tangible product used to satisfy human wants.
  13. Define: Service
    An activity, or intangible product, used to satisfy human wants.
  14. Define: Scarcity
    Occurs when the amount people desire exceeds the amount available at a zero price.
  15. Define: Market
    A set of arrangements by which buyers and sellers carry out exchange at mutually agreeable terms.
  16. Define: Product Market
    A market in which a good or service is bought and sold.
  17. Define: Resource Market
    A market in which a resources is bought and sold.
  18. Define: Circular-Flow Model
    A diagram that traces the flow of resources, products, income, and revenue among economic decision makers.
  19. 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.
  20. Define: Marginal
    Incremental, additional, or extra; used to describe a change in an economic variable.
  21. Define: Microeconomics
    The study of the economic behavior in particular markets, such as that for computers or unskilled labor.
  22. Define: Macroeconomics
    The study of the economic behavior of entire economies.
  23. Define: Economic Theory (Economic Model)
    A simplification of reality used to make predictions about cause and effect in the real world.
  24. Define: Variable
    A measure,such as price or quantity, that can take on different values at different times.
  25. Define: Other-Things-Constant Assumption
    The assumptions, when focusing on the relation among key economic variables, that other variables remain unchanged. Latin: ceteris paribus
  26. Define: Behavioral Assumption
    An assumption that describes the expected behavior of economic decision makers, what motivates them.
  27. Define: Hypothesis
    A theory about how key variables relate.
  28. Define: Positive Economic Statement
    A statement that can be proved or disproved by reference to facts
  29. Define: Normative Economic Statement
    A statement that reflects an opinion, which cannot be proved or disproved by reference to the facts.
  30. Define: Association-is-Causation Fallacy
    The incorrect idea that if two variables are associated in time, one must necessarily cause the other.
  31. 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.
  32. Define: Secondary Effects
    Unintended consequences of economic actions that may develop slowly over time as people react to events.
  33. Define: Origin
    On a graph depicting two-dimensional space, the zero point.
  34. Define: Horizontal Axis
    Line on a graph that begins at the origin and extends left and right. The x-axis.
  35. Define: Vertical Axis
    Lined on a graph that begins at the origin and extends up and down. The y-axis.
  36. 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.
  37. Define: Dependent Variable
    A variable whose value depends on that of the independent variable.
  38. Define: Independent Variable
    A variable whose value determines that of the dependent variable.
  39. Define: Positive Relation (Direct Relation)
    Occurs when two variables increase or decrease together; the two variables move in the same direction.
  40. Define: Negative Relation (Inverse Relation)
    Occurs when two variables move in opposite directions; when one increases, the other decreases.
  41. 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.
  42. 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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