Economics Chapter 1 Review

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Economics

About people and the choices they make, individual choices underlie the organizations

Scarcity

Fundamental concept of economics that indicates that there is less of a good "freely" available from nature than people would like.
ex. Things you want

Choice

The act of selected alternatives

Resource

An input used to produce economic goods

Capital

Man-made resources

Poverty

Basic level of need

Economic Theory

Definitions, postulates, and principles assembled in "cause and effect" relationships

Inputs

Anything used in producing goods and services

Goods

material or tangible stuff/property

Service

Action; something that is done, adds value

Natural Resource

Raw materials from the earth

Human Resource

Mental and physical effort

Physical Resource

Goods used in producing goods and services

Opportunity Cost

The highest valued alternatice that must be sacrificed as a result of choosing among alternatives

Economizing behavior

Choosing with the objective of gaining a specific benefit at the least possible cost

Utility

The subjective benefit or satisfaction a person expects from a choice or course of action

Marginal

Effecs of a change in a current situation;additional

Marginal Choices

Involves effects of net additions

Marginal benefits

Will it be a good descision? What can i get out of it?

Secondary affects

Consequences of economic change that are not immediatly identifiable

Shortage

The amount supplied is less than the amount demanded at a "Particular Price"; can be eliminated

Absolute poverty

less of the material requirements for life; can be eliminated (limit population and ration)

Relative Poverty

Less than someone else by comparision; can be eliminated (rationing)

Threshold Poverty

less than the gov't standard of income or wealth; can be eliminated (lower the standard)

Questions of Scarcity

What will be produced?, How will it be produced?, how much will be produced?, how much will be rationed

Economize

Seeking the greatest benefit in goods and services for the least amount of resources

Immediate effects

short term affects, the results are seen quickly

Value

What someone will give you at the present time

Posivtive Economics

The scientific study of "what is" among economic relationships

Normanitive economics

Judgements about "what ought to be" in economic matters

other things constant

Ceteris paribus

Cause and Effect

Relationships are not always evident

Fallacy of Composition

What is true for the individual is true for the group

Microeconomics

Human behavior within a narrow unit

Macroeconomics

How human behavior affects outcomes on a giant scale

Adam Smith

Father of economics

Sentiments

Free exchanged motivated by self interest, regulated by competative prices

Normanitive

Policy Changes

Income

Money earned or recieved over a fixed amount of time

wages

price paid for labor

productivity

how much time does it take to produce the item

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