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| The social science concerned with how individuals, institutions, and society make optimal (best) choices under conditions of scarcity. |
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| A viewpoint that envisions individuals and institutions making rational decisions by comparing the marginal benefits and marginal costs associated with their actions. |
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| The amount of other products that must be forgone or sacrificed to produce a unit of a product. |
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| The comparison of marginal ("extra" or "additional") benefits and marginal costs, usually for decision making. |
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| The procedure for the systematic pursuit of knowledge involving the observation of facts and the formulation and testing of hypotheses to obtain theories, principles, and laws. |
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| A statement about economic behavior or the economy that enables prediction of the probable effects of certain actions. |
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| Statement of the nature of the relationship between two or more sets of facts. (Ex. Economists say consumers buy more of a particular product when its price falls.) |
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| Other-things-equal Assumption |
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| The assumption that factors other than those being considered are held constant; ceteris paribus assumption. |
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| Economic models that are expressed graphically. |
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| The part of economics concerned with decision making by individual units such as a household, a firm, or an industry and with individual markets, specific goods and services, and product and resource prices. |
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| The part of economics concerned with the economy as a whole; with such major aggregates as the household, business, and government sectors; and with measures of the total economy. |
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| A collection of specific units treated as if they were one unit. (Ex. The treatment of millions of consumers in the US economy as "consumers".) |
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| The analysis of facts or data to establish scientific generalizations about economic behavior. (Concerns "what is") |
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| The part of economics involving value judgments about what the economy should be like; focused on which economic goals and policies should be implemented; policy economics. (Concerns "what ought to be"/"what should be") |
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| The need to make choices because economic wants exceed economic means. |
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| A schedule or curve that shows various combinations of two products a consumer can purchase with a specific money income; AKA a budget constraint. |
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| All natural, human, and manufactured resources that go into the production of goods and services. |
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| All natural resources ("gifts of nature") used in the production process. (e.g; forests, minerals, sunlight, oil deposits, etc.) |
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| All of the physical actions and mental activities that people contribute to the production of goods and services. (e.g; work-related activities of a teacher, mechanic, soldier, etc.) |
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| Also know as capital goods, it includes all manufactured aids used in producing consumer goods and services. (e.g; tools, machinery, factories, storage facilities, etc.) |
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| Spending that pays for the production and accumulation of capital goods. |
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| The human resource that combines the other resources to produce a product, makes non-routine decisions, innovates, and bears risks. |
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| AKA "inputs", the economic resources of land, capital, labor, and entrepreneurial ability. |
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| The use of all available resources to produce want-satisfying goods and services. |
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| Any resources whose quantity cannot be changed by a firm in the short run. |
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| When the state of technology (the methods used to produce output) is constant. |
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| Products that satisfy our wants directly. |
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| Products that satisfy our wants indirectly by making possible more efficient production of consumer goods. |
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| Production Possibilities Curve |
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| A curve showing the different combinations of two goods or services that can be produced in a full-employment, full-production economy where the available supplies of resources and technology are fixed. |
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| Law of Increasing Opportunity Costs |
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| As the production of a particular good increases, the opportunity cost of producing an additional unit rises. |
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