ECO 110 Midterm Study Guide

ECO 110 Midterm Study Guide - ECO 110 Midterm Study Guide...

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ECO 110 Midterm Study Guide Key Terms Bad Anything from which individuals receive disutility or dissatisfaction. Capital Produced goods that can be used as inputs for further production, such as factories,  machinery, tools, computers, and buildings. Decisions at the Margin Decision making characterized by weighing the additional (marginal) benefits of a change  against the additional (marginal) costs of a change with respect to current conditions. Disutility The dissatisfaction one receives from a bad. Economics The science of scarcity; the science of how individuals and societies deal with the fact that  wants are greater than the limited resources available to satisfy those wants. Efficiency Exists when marginal benefits equal marginal costs. Entrepreneurship The particular talent that some people have for organizing the resources of land, labor, and  capital to produce goods, seek new business opportunities, and develop new ways of doing  things. Exchange (Trade) The process of giving up one thing for another. Good Anything from which individuals receive utility or satisfaction. Labor The physical and mental talents people contribute to the production process. Land All natural resources, such as minerals, forests, water, and unimproved land. Macroeconomics The branch of economics that deals with human behavior and choices as they relate to highly  aggregate markets (e.g., the goods and services market) or the entire economy. Marginal Benefits Additional benefits. The benefits connected to consuming an additional unit of a good or  undertaking one more unit of an activity. Marginal Costs Additional costs. The costs connected to consuming an additional unit of a good or  undertaking one more unit of an activity. Microeconomics The branch of economics that deals with human behavior and choices as they relate to  relatively small units— an individual, a firm, an industry, a single market. Normative Economics The study of “what should be” in economic matters. Opportunity Cost The most highly valued opportunity or alternative forfeited when a choice is made. Positive Economics
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The study of “what is” in economic matters. Rationing Device A means for deciding who gets what of available resources and goods. Scarcity The condition in which our wants are greater than the limited resources available to satisfy  those wants. Utility The satisfaction one receives from a good. Comparative Advantage
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ECO 110 Midterm Study Guide - ECO 110 Midterm Study Guide...

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