Econ 2 Notes - Econ 2 Notes 1 Chapter 1 Definitions...

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Chapter 1 Definitions: Econ 2 Notes 1
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1. economi cs the study of how to efficiently utilize scarce resources to satisfy unlimited wants opportunity cost 2. opportun ity costs the best alternative that we give up when we make a choice or decision scarce 3. scarce limited 4. sunk costs costs that cannot be avoided regardless of what is done in the future, because they have already been incurred 5. efficient market a market where profit opportunities are eliminated almost instantaneously 6. Industria l Revolution In England during the late 18 th century, new manufacturing technologies and improved transportation giving rise to the modern factory system and a massive movement of the population from the countryside to the cities 7. microeconomics Examines the functioning of individual industries and the behavior of individual decision-making units – business firms and households. 8. macroeconomics Examines the economic behavior of aggregates on a national scale – income, employment, output, etc 9. positive economics An approach that seeks to understand behavior and the operation of systems without making judgments. It describes what exists and how it works. 10. normative economics An approach that analyzes outcomes of economic behavior, evaluates them as good or bad, and may prescribe courses of action. Also called policy economics 11. descriptive economics The compilation of data that describes phenomena and facts 12. economic theory A statement or set of related statements about cause and effect, action and reaction.
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