13 terms

Econ Ch1 key terms

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Economics as a science
The social science that seeks to understand the choices people make in using scarce resources to meet their wants
Goods and services
Goods are tangible objects, services are activities performed by other people.
Resources
anything people can use as a productive input in its natural state, such as farmland, building sites, forests and mineral deposits.
Scarcity
Situation where there isn't enough of a resource to meet all of everyone's wants
Positive economic statements
Objective statements that can be tested, amended or rejected by reffering to evidence, deals with objective explanation, testing and rejecting theories
Normative economic statements
Value judgment is a subjective statement of opinion rather than a fact that can be tested by looking at evidence
Microeconomics
A branch of economics that studies the choices of individual units including housholds, business firms, and government agencies.
Macroeconomics
A branch of economics that studies large-scale economic phenomena, particularly inflation, unemployment, and economic growth.
Opportunity cost
The cost of a good or service measured in terms of the forgone opportunity to pursue the best possible alternative activity with the same time or resources.
production possibilities frontier (PPF)
A graph that shows possible combinations of goods that an economy can produce given available technology and factors of production
Pareto efficiency
A state of allocation of resources in which it's impossible to make any one individual better off without making at least one individual worse off
Comparative advantage
The ability to produce a good or service at a relatively lower opportunity cost than someone else
Law of comparative advantage
Agents have a comparative advantage over others in producing a particular good if they can produce that good at a lower relative opportunity cost