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Scarcity
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fundamental concept of economics that indicated that there is less of a good freely available from nature than people would like
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Choice
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the act of selecting among alternatives
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Resource
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input used to produce economic goods. Land, labor, skills, natural resources, human made tools, equipment
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Capital
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human made resources like tools, equipment, and structures used to produce other goods and services. Enhance our ability to produce in the future
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Objective
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fact based on observable phenomena that is not influenced by differences in personal opinion
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Subjective
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opinion based on personal preferences and value judgments
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Rationing
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allocating limited supply of a good or resource among people who would like to have it
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Economic theory
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set of definitions, postulates, and principles assembled in a manner that makes clear the 'cause and effect' relationships
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Opportunity cost
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highest valued alternative that must be sacrificed as a result of choosing an option
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Economizing behavior
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choosing the option that offers the greatest benefit at the least possible cost
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Utility
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subjective benefit or satisfaction a person expects from a choice or course of action
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Marginal
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effects of change in a current situation
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Secondary effects
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indirect impact of event or policy that is not immediately observable, unintended and overlooked
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Scientific Thinking
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developing a theory from basic principles and testing it against events in the real world
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Positive economics
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scientific study of 'what is' among economic relationships
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Normative economics
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judgments about 'what ought to be' in economic matters. Cannot be proven false because they are based on value judgments
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Ceteris Paribus
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Latin for 'other things constant' used when the effect of one change is being described, recognizing that if other things changed they could affect the result
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Fallacy of Composition
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erroneous view that what is true for the individual (part) will be true for the group (whole)
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Microeconomics
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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
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Macroeconomics
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focuses on how human behavior affects outcomes in highly aggregated markets, such as markets for labor or consumer products
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