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Economics McConnell Chapter 1
Terms
27
Economics
12th Grade
08/24/2010

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Term
economic perspective
Definition
a viewpoint that envisions individuals and institutions making rational decisions by comparing the marginal benefits and marginal costs associated with their actions
Term
opportunity costs
Definition
the amount of other products that must be forgone or sacrificed to produce a unit of a product
Term
utility
Definition
the want-satisfying power of a good or service; the satisfaction or pleasure a consumer obtains from the consumption of a good or service (or from the consumption of a collection of goods and services)
Term
economics
Definition
the social science concerned with how individuals, institutions, and society make optimal (best) choices under conditions of scarcity
Term
marginal analysis
Definition
the comparison of marginal ("extra" or "additional") benefits and marginal costs, usually for decision making
Term
scientific method
Definition
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
Term
economic principle
Definition
a widely accepted generalization about the economic behavior of individuals or institutions
Term
other-things-equal assumption
Definition
the assumption that factors other than those being considered are held constant;
Term
microeconomics
Definition
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
Term
macroeconomics
Definition
the part of economics concerned with the economy as a whole; with such major aggregates as the hosuehold, business, and government sectors; and with measures of the total economy
Term
aggregate
Definition
a collection of specific economic units treated as if they were one. For example, all prices of individual goods and services are combined into a price level, or all units of output are aggregated into GDP
Term
positive economics
Definition
the analysis of facts or data to establish scientific generalizations about economic behavior
Term
normative economics
Definition
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
Term
economizing problem
Definition
the choices necessitated because society's economic wants for goods and services are unlimited but the resources available to satisfy these wants are limited (scarce)
Term
budget line
Definition
a line that shows the different combinations of two products a consumer can purchase with a specific money income, given the products' prices
Term
economic resources
Definition
the land, labor, capital, and entrepreneurial ability that are used in the production of goods and services; productive agents; factors of production
Term
land
Definition
natural resources ("free gifts of nature") used to produce goods and services
Term
labor
Definition
people's physical and mental talents and efforts that are used to help produce goods and services
Term
capital
Definition
human-made resources (buildings, machinery, and equipment) used to produce goods and services; goods that do not directly satisfy human wants; also called capital goods
Term
investment
Definition
in economics, spending for the production and accumulation of capital and additions to inventories
Term
entrepreneurial ability
Definition
the human resource that combines the other resources to produce a product, makes nonroutine decisions, innovates, and bears risks
Term
factors of production
Definition
economic resources: land, labor, capital, and entrepreneurial ability
Term
consumer goods
Definition
products and services that satisfy human wants directly
Term
capital goods
Definition
Human-made resources (buildings, machinery, and equipment) used to produce goods and services; goods that do not directly satisfy human wants;
Term
production possiblites curve
Definition
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
Term
law of increasing opportunity costs
Definition
the principle that as the production of a good increases,  the opportunity cost of producing an additonal unit rises
Term
economic growth
Definition

1)an outward shift in the production possibilites curve that results from an increase in resource supplies or quality or an improvement in technology

2) an increase of real ouput (GDP) or real ouput per capita

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