Microeconomics (Irvin B. Tucker)

17 terms by vzvrtny

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Chapter 1

Capital

The physical plants, machinery, and equipment used to produce other goods. Capital goods are human-made goods that do not directly satisfy human wants.

Ceteris paribus

A Latin phrase that means while certain variables change, "all other things remain unchanged."

Direct relationship

A positive association between two variables. When one variable increases, the other variable increases, and when one variable decreases, the other variable decreases.

Economics

The study of how society chooses to allocate its scarce resources to the production of goods and services in order to satisfy unlimited wants.

Entrepreneurship

The creative ability of individuals to seek profits by taking risks and combining resources to produce innovative products.

Independent relationship

A zero association between two variables. When one variable changes, the other variable remains unchanged.

Inverse relationship

A negative association between two variables. When one variable increases, the other decreases, and when one variable decreases, the other variable increases.

Labor

The mental and physical capacity of workers to produce goods and services.

Land

A shorthand expression for any natural resource provided by nature.

Macroeconomics

The branch of economics that studies decision making for the economy as a whole.

Microeconomics

The branch of economics that studies decision making by a single individual, household, firm, industry, or level of government.

Model

A simplified description of reality used to understand and predict the relationship between variables.

Normative economics

An analysis based on value judgment.

Positive economics

An analysis limited to statements that are verifiable.

Resources

The basic categories of inputs used to produce goods and services. Resources are also called factors of production. Economists divide resources into three categories: land, labor, and capital.

Scarcity

The condition in which human wants are forever greater than the available supply of time, goods, and resources.

Slope

The ratio of the change in the variable on the vertical axis (the rise or fall) to the change in the variable on the horizontal axis (the run).

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