Review for Test One - Review for Test One • • • •...

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Review for Test One The economic perspective a viewpoint that envisions individuals and institutions making rational decisions by comparing the marginal benefits and marginal costs associated with their actions The common economic problem* Find definition Scientific method The procedure for the systematic pursuit of knowledge involving the observation of facts and the formulation and testing of hypothesis to obtain theories, principles, and laws Ceteris paribus- “all other things equal” The assumption that factors other than those being considered are held constant Statements Normative Statements The part of economics involving value judgment about what the economics should be like. Focused on which economic goals and policies should be implemented positive statements the analysis of facts or data to establish scientific generalizations about economic behaviors Resources a natural, human, or manufactured item that helps produce goods and services a productive agent or factoring of production land labor capital entrepreneurship Efficiency Allocative the apportionment of resources among firms and industries to obtain the production of the products most wanted by society (consumers) the output of each product at which its marginal costs and price or marginal benefit are equal
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productive the production of a good in the lease costly way occurs when production takes place at the output at which average total cost is a minimum and marginal product per dollar’s worth is the same for all inputs opportunity cost the amount of other products that must be forgone or sacrificed to produce a unit of a product production possibilities curve a curve showing the different combinations of two goods or two services that can be produced in a full-employment, full- production economy where the available supplies of resources and technology are fixed Demand Change in demand A change in a quantity demanded of a good or service at every price A shift of the demand curve to the left or the right Quantity demanded The amount of a good or service that buyers desire to purchase at a particular price during some period Change in quantity demanded A change in the amount of a product that consumers are willing and able to purchase because of a change in the product’s price Slope of the curve Find definition Demand Factors 1. Taste
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2. number of consumers
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Review for Test One - Review for Test One • • • •...

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