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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