Ch.1 Vocab Flashcards
(28 cards)
Economics 12
Chapter 1 Vocabulary
analytical economics (or positive economics)
The branch of economics that deals with facts and direct observation of the world.
capital goods
Goods such as tools or machinery used to produce consumer goods.
cause-and-effect fallacy (or post hoc fallacy)
A mistaken belief that what occurs before some event is logically the cause of it.
consumer goods
Those goods or services that an economy produces to satisfy human needs.
economics
The study of the way society makes decisions about the use of scarce resources.
economize
To use limited resources efficiently in production.
economy
A self-sustaining system in which many independent transactions in a society create distinct flows of money and products.
effective
A particular use of resources that achieves a desired end, such as consumption.
efficient
The use of a bare minimum of resources to achieve a desired end, such as consumption.
fallacy
A hypothesis that has been proven false but is still accepted by many people because it appears to be true.
fallacy of composition
A mistaken belief that what is good for an individual is automatically good for everyone, or what is good for everyone is good for the individual.
fallacy of single causation
A mistaken belief, based on oversimplification, that a particular event has one cause rather than several.
frontier
The curve on a production possibilities graph representing the maximum numbers of two items that can be produced with a given amount of resources.
input
A productive resource such as land, labour, or capital used to produce an output.
law of diminishing returns
The eventual decline in the rate of extra outputs produced that occurs when one input used in production of the output is held constant and the others are increased.
law of increasing relative cost
The increase in the relative cost of producing more of item A, measure by the numbers of another item, B, that could be produced with the same resources.
law of increasing returns to scale
The increase in the rate of extra outputs produced when all inputs used in production are increased and no inputs are held constant.
normative economics (or policy economics)
The branch of economics that deals with value judgements about economic subjects rather than fact and observations.
oikos
A Greek word meaning “household” or “estate,” which historically was the first subject of economics analysis.
opportunity cost
The sum of all that is lost from taking one course of action over another or of producing one item measured in terms of another that could have been produced with the same resources.
origin
As used in graphs, the point at which the vertical and horizontal axes meet.
output
The products produced by using resources or inputs such as land, labour, or capital.
production possibilities curve
A graphical representation of the production choices facing an economy.
