Chapter 1 Vocab - • Microeconomics-Study of household and...

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Chapter 1 Section 1 Economics- The study of the allocation of our limited resources to satisfy our unlimited wants Resources- Inputs used to produce goods and services Scarcity- Exists when human wants (material and non material) exceed available resources The Economic Problem- Scarcity forces us to choose, and choices are costly because we must give up other opportunities that we value Section 2 Rational Behavior- People do the best they can, based on their values of information, under current and anticipated future circumstances Section 3 Theory- Statement or proposition used to explain and predict behavior in the real world Hypothesis- A testable proposition Empirical Analysis- The use of data to test a hypothesis Ceteris Paribus- Holding all other things constant
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Unformatted text preview: • Microeconomics-Study of household and firm behavior and how they interact in the marketplace • Macroeconomics-Study of the whole economy, including the topics of inflation, unemployment, and economic growth. • Aggregate-The total amount Section 4 • Correlation-When two events occur together • Causation-When one event brings about another event • Fallacy of Composition-The incorrect view that what is true for the individual is always true for the group. Section 5 • Positive Analysis-an objective, testable statement that describes what happens and why it happens • Normative Analysis-A subjective, contestable statement that attempts to describe what should be done....
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Chapter 1 Vocab - • Microeconomics-Study of household and...

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