{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

Economics-Study Guide Test 1

Economics-Study Guide Test 1 - Economics Social science...

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
Economics - Social science concerned with how individuals, institutions, and society make optimal (best) choices under conditions of scarcity. Opportunity Cost - ( Idea there is no free lunch) To obtain more of one thing, society forgoes the opportunity of getting the next best thing. Utility - The pleasure, happiness, or satisfaction obtained from obtaining a good or service. Marginal analysis - Comparisons of marginal benefits and marginal costs, usually for decision making. Scientific Method - Procedure- Observing real-world behavior and outcomes. Based on these observations, formulating a possible explanation of cause and effect (hypothesis) Testing this explanation by comparing the outcomes of specific events to the outcome predicted by the hypothesis. Accepting , rejecting, and modifying the hypothesis, based on these comparisons. Continuing to test the hypothesis against the facts. Other-Things- Equal-Assumption - The assumption that factors other than those being considered do not change. Micro-Economics - A part of economics concerned with individual units, such as a person, household, firm or industry. Observes the details of an economic unit, or very small segment of the economy under a figurative microscope. Macro-Economics - Examines either the economy as a whole or its basic subdivisions or aggregates, such as the government, household, and business sectors. Positive Economics- Focuses on facts and cause and effect relationships. Includes description. Theory development and theory testing. “ What is” “ Factual” Normative Economics- Incorporates value judgments about what the economy should be like or what particular policy actions should be recommended to achieve a desirable goal. Looks at the desirability of certain aspects of the economy. “What ought to be” Economizing Problem - The need to make choices because economic wants exceeds economic needs. Enhance your understanding of economic models and the different between Micro and Macro economics analysis. Budget Line- (Budget Constraint)- A schedule or curve that shows various combinations of 2 products a consumer can purchase with a specific money income.
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Economic Resources- “Scarce Resources” – All natural, human, and manufactures resources that go into the production of goods and services, these are limited or scarce. Resource Categories- Land, Labor, Capitol Land - Consists of all natural resources (gifts of nature) used in the production process, such as arable land, forests, mineral, oil deposits, and water resources. Labor - Physical and mental talents of individuals used in the production process. (Logger, retail clerk, machinist, teacher, pro football player, and nuclear physicist). Capitol - All manufactures aids used in producing goods and services. (Factory, storage, transportation, distribution facilities, tools, and machinery).
Background image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}