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Chapter 1
What is Economics?
25
Economics
Not Applicable
09/05/2011

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Term
Big Tradeoff
Definition
The tradeoff between equality and efficiency
Term
Capital
Definition
The tools, equipment, buildings, and other constructions that businesses use to produce goods and services.
Term
Economic Model
Definition
A description of some aspect of the economic world that includes only those features of the world that are needed for the purpose at hand.
Term
Economics
Definition
The social science that studies the choices that individuals, businesses, governments, and entire societies make as they cope with scarcity and the incentives that influence and reconcile those choices.
Term
Entrepreneurship
Definition
The human resource that organizes the other three factors of production: labor, land, and captial.
Term
Factors of Production
Definition
The productive resources used to produce goods and services.
Term
Goods and Services
Definition
All the objects that people value and produce to satisfy human wants.
Term
Human Capital
Definition
The knowledge and skill that people obtain from education, on-the-job training, and work experience.
Term
Incentive
Definition
A reward that encourages an action or a penalty that discourages one.
Term
Interest
Definition
The income that capital earns.
Term
Labor
Definition
The work time and work effort that people devote to producing goods and services.
Term
Land
Definition
All the "gifts of nature" that we use to produce goods and services.
Term
Macroeconomics
Definition
The study of the performace of the national economy and the global economy.
Term
Margin
Definition
When a choice is changed by a small amount or by a little at a time, the choice is made at the margin.
Term
Marginal Benefit
Definition
The benefit that a person receives from consuming one more unit of a good or service.  It is measured as the maximum amount that a person is willing to pay for one more unit of the good or service.
Term
Marginal Cost
Definition
The opportunity cost of producing one more unit of a good or service.  It is the best alternative forgone.  It is calculated as the increase in total cost divided by the increase in output.
Term
Microeconomics
Definition
The study of the choices that individuals and businesses make, the way these choices interact in markets, and the influence of governments.
Term
Opportunity Cost
Definition
The highest-valued alternative that we give up to get something.
Term
Profit
Definition
The income earned by entrepreneurship.
Term
Rent
Definition
The income that land earns.
Term
Scarcity
Definition
Our inability to satisfy all our wants.
Term
Self-Interest
Definition
The choices that you think are best ones available for you are choices made in your self-interest.
Term
Social Interest
Definition
Choices that are the best ones for society as a whole.
Term
Tradeoff
Definition
A constraint that involves giving up one thing to get something else.
Term
Wages
Definition
The income that labor earns.
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