| Term | Definition |
|---|
| Economics | The Social Science studying how to best allocate scarce or limited resources among unlimited wants. |
| Natural Resources | The renewable and nonrenewable gifts of nature that can be used to produce goods and service, including but not limited to landform and bodies of water. |
| Consumer Sovereignty | Describes the consumer as the "king", or ruler of the market, the one who determines what products will be produced by using "dollar votes" to determine what is and is not produced. |
| Economic Model | A simplified explanation of how the economy or part of the economy works - an abstraction of an economic reality. |
| Ceteris Paribus | The Latin phrase meaning "everything else being equal." It is used to allow economists the ability to develop one-to-one, cause-and- effect relationships. |
| Microeconomics | The branch of economics that focuses on how human behavior affects the conduct of affairs within narrowly defined units, such as individual households or business firms. |
| Macroeconomics | Looks at the economy as a whole, focusing on issues such as growth, unemployment, inflation, and business cycles |
| Positive Economics | The part of economics involving what are established facts; the analysis of facts or data to establish scientific generalizations about economic behavior |
| Normative Economics | Judgments about "what ought to be" in economic matters. |
| Invisible Hand | Phrase coined by Adam Smith to describe the process that turns self-directed gain into social and economic benefits for all. |
| Adam Smith | 1723-1790. Pioneering economic theorist. Father of economics. Explained how rational self-interest and competition, operating in a social framework which ultimately depends on adherence to moral obligations, can lead to economic well-being and prosperity. |
| Econometrics | The application of mathematics and statistics to the study of economic and financial data. |
| Circular Flow | A model that shows the flow of goods and services and the interaction among households, businesses, and government. |
| Firm | An economic unit that uses resources to produce a product which it then sells. |
| Household | An economic unit of one person or more that sells resources and buys goods and services |
| Renewable Resources | Resources that can be used and replaced over a relatively short time period; ex: trees, beans, bananas, sugar, tea |
| Non-renewable Resource | Resources that cannot be reused or replaced easily (ex. gems, iron, copper, fossil fuels) |
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