Combined Terms.docx - ECO201 Terminology Directions Define...

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ECO201 Terminology Directions: Define each of the terms below and evaluate the significance of each term to the topics presented within the textbook. Chapter 1 Term Definition Significance Incentives (2) Rewards or penalties for engaging in a particular activity. Economics (2)
Resources (2)
Wants (2)
Microeconomics (3)
Macroeconomics (3)
Aggregates (3)
Economic system (3)
Rationality assumption (5)
Models (or Theories) (7)
Empirical (9)
Behavioral economics (9)
Bounded rationality (10)
Positive economics (10) Analysis that is strictly limited to making either purely descriptive
ECO201 Terminology statements or scientific predictions; for example, “If A then B.” A statement of what is. Normative economics (10) Analysis involving value judgments about economic policies; relates to whether outcomes are good or bad. A statement of what ought to be. Chapter 2 Scarcity (27) A situation in which the ingredients for producing the things that people desire are insufficient to satisfy all wants at a zero price. Production (27) Any activity that results in conversion of resources into products that can be used in consumption. Land (27) The natural resources that are available from nature. Land as a resource includes location, original fertility, mineral deposits, topography, climate, water, and vegetation. Labor (27) Productive contributions of humans who work. Physical capital (28) All manufactured resources, including buildings, equipment, machines and improvements to the land that are used for production.

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