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


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


The act of selected alternatives


An input used to produce economic goods


Man-made resources


Basic level of need

Economic Theory

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


Anything used in producing goods and services


material or tangible stuff/property


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


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


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


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


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

Immediate effects

short term affects, the results are seen quickly


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


Human behavior within a narrow unit


How human behavior affects outcomes on a giant scale

Adam Smith

Father of economics


Free exchanged motivated by self interest, regulated by competative prices


Policy Changes


Money earned or recieved over a fixed amount of time


price paid for labor


how much time does it take to produce the item

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