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The social science concerned with how individuals, institutions, and society make optimal choices under conditions of scarcity
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terms list

The social science concerned with how individuals, institutions, and society make optimal choices under conditions of scarcity
Economic perspective
the unique perspective from which economists view things
Opportunity Cost
to obtain more of one thing, society forgoes the opportunity of getting the next best thing
the pleasure, happiness, or satisfaction obtained from consuming a good or service
Marginal Analysis
Comparisons of marginal benefits and costs, usually for decision making. Marginal means "extra", "additional", or "a change in"
Scientific Method
a) the observation of real-world behavior and outcomes b) based on those observations, the formulation of a possible explanation of cause and effect (hypothesis) c)the testing of this explanation by comparing the outcomes of specific events to the outcome predicted by the hypothesis d) the acceptance, rejection, or modification of the hypothesis, based on these comparisons e) the continued testing of the hypothesis against facts
Economic Principle
a very well tested and widely accepted economic theory
simplified representation of how something works (market)
Other-things-equal assumption (ceteris paribus)
All variables other than the one being looked at remain constant
Examination of the economy as a whole or its basic subdivisions or aggregates, such as the government, household, and business sectors.
A collection of specific economic units treated as if they were one unit (lumping together the millions of consumers in the US economy and treat them as one huge unit called consumers)
Economics concerned with individual units such as a person, a household, a firm or an industry; observation of the details of an economic unit (individual workers, specific labor markers)
Positive economics
Focuses on facts and cause and effect relationships; includes description, theory development, and theory testing
Normative economics
Value judgments about what the economy should be like; looks at the desirability of certain aspects of the economy and underlies expressions of support for particular economic policies
Economizing problem
the need to make choices because economic wants exceed economic means
Budget line
a schedule or curve that shows various combinations of two products a consumer can purchase with a specific money income
Economic resources
all natural, human, and manufactured resources that go into the production of goods and services
includes all natural resources used in the production process, such as arable land, forests, mineral and oil deposits, and water resources
the physical and mental talents of individuals used in producing goods and services
all manufactured aids used in producing consumer goods and services; included are all factory storage transportation, and distribution facilities, as well as tools and machinery. These goods indirectly aid the consumer by aiding the production of consumer goods
the purchase of capital goods
Entrepreneurial ability
the human resource that combines the other resources to produce a product, makes non-routine decisions, innovates, and bears risk
Factors of production (inputs)
land, labor, capital and entrepreneurial ability
Consumer goods
Goods that are bought directly by the consumer
Capital goods
tools, machinery, and other productive equipment
Production possibilities curve
A curve that displays the different combinations of goods and services that society can produce in a fully employed economy, assuming a fixed availability or supplies of resources and constant technology
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 of economic activity, typically resulting after an increase in resource supplies or advancement in technology

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