# Microeconomics (Irvin B. Tucker)

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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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