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26 Cards in this Set
- Front
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The social science dealing with the use of scarce resources to obtain the maximum satisfaction of society's virtually unlimited economic wants.
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Economics
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The assumption that factors other than those being considered are held constant.
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Ceteris Paribus Assumption
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The part of economics concerned with the economy as a whole; with such major aggregates as the household, business, and government sectors; and with measures of the total economy.
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Macroeconomics
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The part of economics concerned with such individual units as industries, firms, and households and with individual markets, specific goods and services, and product and resource prices.
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Microeconomics
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(1) The use of all available resources to produce want-satisfying goods and services; (2) the situation in which the unemployment rate is equal to the full-employment unemployment rate and there is frictional and structural but no cyclical unemployment (and the real GDP of the economy equals its potential output).
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Full Employment
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The comparison of marginal ("extra" or "additional") benefits and marginal costs, usually for decision making.
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Marginal Analysis
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An economic system in which property resources are privately owned and markets and prices are used to direct and coordinate economic activities.
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Capitalism
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The analysis of facts or data to establish scientific generalizations about economic behavior.
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Positive Economics
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The part of economics involving value judgments about what the economy should be like; focused on which economic goals and policies should be implemented; policy economics.
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Normative Economics
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The choices necessitated because society's economic wants for goods and services are unlimited but the resources available to satisfy these wants are limited (scarce).
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Economizing Problem
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The limited quantities of land, capital, labor, and entrepreneurial ability that are never sufficient to satisfy people's virtually unlimited economic wants.
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Scarce Resources
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Economic resources: land, capital, labor, and entrepreneurial ability.
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Factors of Production
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Natural Resources ("free gifts of nature") used to produce goods and services.
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Land
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Human-made resources (buildings, machinery, and equipment) used to produce goods and services; goods that do not directly satisfy human wants; also called capital goods.
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Capital
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People's physical and mental talents and efforts that are used to help produce goods and services.
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Labor
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The human resource that combines the other resources to produce a product, makes nonroutine decisions, innovates, and bears risks.
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Entrepreneurial Ability
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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 cost and price or marginal benefit are equal.
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Allocative Efficiency
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The production of a good in the least costly way; occurs when production takes place at the output at which average cost is a minimum.
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Productive Efficiency
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The amount of other products that must be forgone or sacrificed to produce a unit of a product.
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Opportunity Cost
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The principle that as the production of a good increases, the opportunity cost of producing an additional unit rises.
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Law of Increasing Opportunity Costs
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A particular set of institutional arrangements and a coordinating mechanism for solving the economizing problem; a method of organizing an economy, of which the market system and the command system are the two general types.
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Economic System
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(1) An outward shift in the production possibilities curve that results from an increase in resource supplies or quality or an improvement in technology; (2) an increase of real output (gross domestic product) or real output per capita.
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Economic Growth
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A market in which products are sold by firms and bought by households.
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Product Market
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A market in which households sell and firms buy resources or the services of resources.
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Resource Market
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In what ways are resources scarce?
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1. Quantitatively limited
2. Limited alternative uses |
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What are the assumptions for the production possibilities table?
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1. Full employment & full production
2. Supply of resources is fixed 3. Technology is constant 4. Only two goods are produced. |