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SS Chapter 1
An Economic Way of Thinking
29
Economics
9th Grade
01/27/2009

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Term
Economics
Definition
The study of how people choose to use thier limited resources to satisfy their unlimited wants
Term
Economy
Definition
A system used to manage limited resources for the production, distribution, and consumption of goods and servies
Term
Positive Economics
Definition
The branch of economics that uses objective ananlysis to find out how the world works.  The goal is to describe how things are.
Term
Normative Economics
Definition
The branch of economics that applies value judgements to data in order to recommend actions or policies.  The goal is to advise how things ought to be done.
Term

Scarcity

Definition
The condition that results because people have limited resources but unlimited wants.
Term
Tradeoff
Definition
The exchange of one benefit or advantage for another that is thought to be better. 
Term
Cost Benefit Analysis
Definition
A way to compare the costs of an action with the benefits of that action.  If benefits exceed costs, then the action is worth taking. 
Term
incentive
Definition
Any factor that encourages or motivates a person to do something.  Prices, taxes, and laws create incentives that influence how people behave. 
Term
economic enigmas
Definition
puzzles or riddles that might be explained through an economic analysis
Term
enigma
Definition
obscure or hard to understand
Term
resource
Definition
anything used to produce an economic good or service
Term
microeconomics
Definition
economic decisions made by individuals, households, and businesses
Term
macroeconomics
Definition
economics focusing on the workings of hte economy as a whole
Term
scarcity forces tradeoff principle
Definition

limited resources force people to make choices and force tradeoffs.  Also known as the "no free lunch principle."  Every choice, even free lunch involves tradeoffs.

Term
costs
Definition
what you spend in time, money, and effort or other sacrifices
Term
benefits
Definition
what you gain from something in terms of money, time, experience, or other improvements in your situation
Term
cost versus benefits principle
Definition
people choose something when the benefits of doing so are greater than the cost
Term
market
Definition
any arrangement that brings buyers and sellers together to do business with each other
Term
markets coordinate trade principle
Definition
markets usually do better than anyone or anything else at coordinating exchanges between buyers and sellers
Term
future consequences count principle
Definition
decisions made today have consequences not only for today but in the future
Term
scientific method
Definition
poses a question, developing a hypothesis, conducting studies, gathering infomation, analyzing information, and evaluating hypothesis
Term
data
Definition
factual information
Term
graph
Definition
visual representation between two given sets of data
Term
variable
Definition
quantity or data can vary or change
Term
axis
Definition
each of the two perpendicular lines of coordinate system.  x-axis is the horizontal line.  y-axis is the verticle line.
Term
curve
Definition
any line representing data points plotted on a graph--it doesn't have to be curved. 
Term
rational behavior model
Definition
a tool for understanding human behavior--people make decisions in ways that serve their own interests without taking into account the well being of others
Term
economic model
Definition
A simplified representation of reality that allows economists to focus on the efforts of one change at a time.  It can be an equation, computer program, diagram, or written description. 
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