Term
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Definition
| a simplified representation of a real situation that is used to better understand real-life situations |
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Term
| other things equal assumption |
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Definition
| all other relevant factors remain unchanged |
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Term
| production possibility frontier |
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Definition
| illustrates the trade-offs facing an economy that produces only goods; it shows the maximum quantity of one good that can be produced for any given quantity produced of the other |
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Definition
| resources used to produce goods & services |
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Definition
| the technical means for producing goods & services |
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Definition
| if the opportunity cost of producing the good or service is lower for an individual than for other people |
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Term
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Definition
| if an individual can do an activity better than other people |
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Definition
| people directly exchange goods or service that they have for goods or services that they want |
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Definition
| represents the transactions in an economy by flows around a circle |
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Term
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Definition
| a person or a group of people that share their income |
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Term
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Definition
| an organization that produces goods & services for sale |
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Term
| markets for goods & services |
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Definition
| where firms well goods & services that they produce to households |
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Term
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Definition
| where firms buy the resources they need to produce goods & services |
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Term
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Definition
| the way in which total income is divided among the owners of the various factors of production |
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Term
| most economic _____ are "thought experiments", or simplified representations of reality |
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Definition
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Term
| most economic models rely on the _____ |
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Definition
| other things equal assumption |
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Term
| an important economic model is the _____, which illustrates the concepts of efficiency, opportunity cost, & economic growth |
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Definition
| production possibility frontier |
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Term
| _____ is a model that explains the sources of gains from trade |
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Definition
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Term
| comparative advantage is often confused with _____ |
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Definition
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Term
| in the simplest economies people _____ rather than trade with money as in a modern economy |
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Definition
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Term
| the _____ illustrates the transactions within the economy as flows of goods & services, factors of production, & money between households & firms |
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Definition
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Term
| transactions in an economy occur in _____ and _____ |
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Definition
| markets for goods & services; factor markets |
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Term
| ultimately, factor markets determine the economy's _____, how total income is divided among the owners of the various factors of production |
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Definition
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Term
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Definition
| the branch of economic analysis that describes the way the economy actually works |
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Term
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Definition
| makes prescriptions about the way the economy should work |
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Term
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Definition
| a simple prediction of the future |
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Term
| economists do mostly _____, analysis of the way the world works, in which there are definite right & wrong answers & which involve making _____ |
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Definition
| positive economics; forecast |
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Term
| in _____, which makes prescriptions about how things ought to be, there are often no right answers & only value judgments |
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Definition
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